A project of Volunteers -in sid

9,
.I,0

Develooins Small - Scale Industries in India‘; An _

Integrated Apordach . c- '.
./ Te :rr
by: Marilyn CarF/ '
Af
.aPublished'&?
Intermediate Technology Publications, Ltd;
.
9 King Street
4. London WC2E 8HN
United Kingdom*
3 Paper copies are '$10.50.
.
.i,
Available from: "h
Ir?kermediate Technology Publications, Ltd.
9 Ki?%g Street
London WC2E 8HN
United Kingdom %

Reproduced by permission of Intermediate

L.. Technology Publications, Ltd. ~
P

..
\
*
Reprdduction of this microfiche document in any
form is subject to the samel restrictions -as those
of the original document.

,
 /

.s.

i
* ’
 7 6 3.
. ’
. - -

,’

..
The Bit-la Institute of Technology, who& small industries s&eme is
-A- w-i:
.;;- described her* shows ity of liigh academic,s&m@ng,.
can, by making use of ponsored programmesaiidby A
” ‘I collaboration ‘with s’&e es and financial institutions, assist in’
_ - &da ‘-. ,*
developing and promoting small’industries.
This book provides a-clear insight into the workings of a unique and-
successful scheme whichentrepreneurs with the necessary training,
financial backing and the ri&ght product have launched into small
industries with considerable success. ._
Thanks to the enthusiasm, commitment, and ability of membersof .
,
Birla staff, carefully selected ektrepreneurs are assisted in obtaining
0 ,
loans, selecting the right product, producing and marketing it, in
response to the perceived needs of the area. The book demonstrates ’
how, an outside agency can act as a catalyst in helping to bring
Government schemes to fruitiT;- Businessmen, academics, and all ~ 8
those-concerned with the development ‘of small indus@es- co?ld. GO*‘*’ ,
. benefit from Bit-la Institute’s experience. i q
2” Marilyn Carr, the author, is an economist with the Intermediate . A
Q
Technology Development Group. She has wide experience of
appropriate technoio >and small industry programmes in develop- . \ ..> 1’
8
ing countries and has written several publications on these topics.
. She has carried out several consultancies for the U.N. and.the W&Id + : ..,,
Bank. 4

ISBN 0903031817 -,
, i Y1

Intermediate Technology Publications Ltd. I

9 King Street, London WCZE 8HN.,

,
 ’ -w

Developing Small-scale Inch&r&k in. Itiditi

An Integrated Approabh _ ~’ .. -

*The experience of the Birla Inititute of Tichnplogy’s small $dust& sckmk i\ -

I
i.

. .
. *
,
* *
.7

Y
 1 INTRODUCTION i q
h
:
,_”
2 THE ENVIRONMENT FOR-SMALL-
/
,., --.
SCALE ‘INDUSTRIALIZATIQN IN
” <BIHAR STATE 3 _’
Background 3 -,. I”
: Policies for the promotion of small-
scale industries 4 4.
*
3 DEYELQPMENT OF’SMALL-SCALE
INDUSTRIES - AN INTEGRATED
APPROACH 10
z History and growth -10
Objecri\,es and methodology 18

Ws4 CASE STUDIES ; *t;<, 24 >

hlaterial-handling and fabrication
industries . 24
Metal-processing industries 28
Electronic controt industries 38
Electrical power industries 42 -
Pharmaceutical and chemical’industries 46 _ . 3.
A sick industry r 49.
,4 convalescent industry : - 52 sJu.
,:,C‘ 9 I
5 EVALUATIONOF THE SMALL-
. SCALE INDUSTRY SCHEME s ’ 56:
c .. General overview 56
’ Factors in Success - and problems 64

1 6 AN APPROACH TO RURAL
! INDUSTRIALIZATION AND
RURAL DEVELOPMENT )t . 70 d ~
Introduction ’ 70
Rural industries 70 . (
Rural artisan-training 71
; Rural development 73
Future directions 73.
iSummary _ 75

7>‘SUMMARY AND CONCLUSIONS 76 ’ ,

.
.+. .
t iI : 9.
,
-’ ,,- .
. 0
c * .
i.
 cc.
I . 4
, - 9 ,
* .-

ANNEX 1 List of machinery and , 3 \,

. equipment in central servicm ’
/- .- facility 7-f’ ,-
-I
ANNEX 2 Products and processes __
developed for entrepreneurs 78
ANNEX 3 , List of projects undertaken
;X’--
- ,:, on. behalf,of local industries 79
~;NNES $ List of machinery and >:: - :
eqLipmen1 instali&-J i~$$$&&~e~“-l . - .‘1 -=,
industries studied -80 ,\/-
ANNEX 5 Banking procedures 82. _
ANNEX 6 Open Market Price&of Ran: ’ ’
hlarerials: b972 - 1980 ‘84, 1’ 3
ANNEX7 Profiles of selected \
entrepreneurs sponsored by
the BISR’centre at Jaipur 85
ANNEX 8 Tool kits give; to rural 1
artisans after training 86 . 9 ;
4
BIBLIOGRAPHk 87 <j

’ 4
_ n
 -----.

’ k. :-

Delhi. \
 . .A
r
* 81 ..
C. I

LIST OF DIAGRAMS
4
.

-Q ."
?
1 Structure of central and state-level.
assistance to small-scale industries in Bihar’
2 Agencies involved in the Ranchi scheme and .
relat d jmall-scale industry development P
\
and #-ornotion centres I .

3 SIRTDO staff and their func&ns .

3 Activities involved in the Ranchi small
industry scheme

, . * 9,:

-.'<EIfT OF PHOT0GRAPe.S '

9

1, The main administrative building and

central workshop of the Ranchi Small
Industry Scheme jr
2 The ‘nursery’ estate
3 Reciprocal coal feeder: laboratory and -
commercial prototypes
4: Precision Foundry
5 Gravity die-casting of transmission clamps
6 Mercuri;m’s improved draw-bench for
correcting diameter of the bar
7 Power press for steel balls at Perfect
Forgings c

8 Meditron’s electronic control pane1 for.’

plano-miller
9 Transgietz’s dry-type transformer, with a
burnt-out transforme& imported from
Europe \ /
10 Metal housing fo2 transformers
11 Ranchi Rolling Mill ,’
1 igenous medicinal plants
1 lar energy devices

.
 4 *

-i

r -w
My thanks are also due to the entrepreneurs
and December mentioned in the case studies, who s;omeho%-3. /I, ’ ”
found the time to sit down with~me a&I provide
,so much information,about their busiiesses and !’
rhemselves:
office facilities, accommodation on the BIT Finally, my thanks go,,to several (if my col-’ ,
campus. and of course. large amounts of their, leagues at the Intermqdiate_Technolbgy Devel,t ~ ’
time, 1 could not ha\.e bvritten the report. My’ epment Group ITDG - especially Dennis Fros,t,, ,
thanks are due to Dr H.C. Pande, Director of Frank Solomon, Richgrd -Whitcotibe, David ’ .
BIT, Dr..4.K. Basu, Dr B. Kanta Rao, Prof. J.S. Wright, Ken Marshall ‘and Gary vhitby - [or
Ar\+ikar, and especidly to Prof. Indrajit De) .t heir comments and advice in preparing the final
b ho spent so many hours patiently explaining manuscript. fhanks are also due-to Malcol,m
the \\ork bring done and the philosophy behind Harper for his valuable comments*and for pro-
I[. viding t& preface to the report.
 PREFACE ‘, ’ -.’ _

.: ’ >
.
If success is measured in terms of high level pro- where. The Birla Institute’s st~ff+g&hrdugh-
nounsements, prestige publications, paragraphs out attempted to work with. and make use-of
in development plans and the establishment of Government sponsored programmes, in spite of
ambitious national inst,itutions, the battle for difficulties, rather than trying to develqp their
small enterprises has been iion. When we look,’ own ciedit systems or industrigl estat&. They
ho\\ri.er. at the, effects of all this on existing have cle2rly understood the operational prob:+
hmall businesses, or on the number of viable new lems and objectives of Government empldyees,
businesses N hich are started:,\ve may sometimes and hav,e elicited their co-operation and, assis;
conclude that. the battle has hardly even begun. tance by providing a means whereby they can
Small enterprises need a judicious mixture of achieve their objectives*more easily. This colla-
credit, training, management and t&hnical borative attitude is further expressed in the rela-
advice, buildings and so on, and the nature of tlonship between the entrepreneurs and the
rhis assistance, and the form which is most suit- Institute, and among the enterpriiei themselves.
able for particular types of business at particular They deperid on one another foL their indepen-
\I~~cz\ ot‘ development, ha1.e been widely inves- dence; the owners of the bu;nesses support one
rlgated. \\‘har ib lacking,,hdwever, is effecti\$e another in their efforts, and some also play a
deli\ cr>, mechanisms; Iho\+ can appropriate role in the wider rural development activities of
form\ of a\sisrance aCtually reach the individ- the Institute. Although they may owe their sue-
ualb.and enrerprises they are intended to help? cess in establishing a business.to the Institute,
Jlu~t a~adrmi~ institutions have not even [hey are carefulli selected as being people of
aI[rrnpIrd a~tuall!. IO assist small enterprises: ability and initiative, who are unwilling,,to
,.-l\n> 1111rrcs1rhelr staff may ha1.e in such acti- become permpnently dependent on any fornf OP
\ itie\ ha\ ral\en the form of sociological or ~assistance, and ‘are aware of their wider res-
+aonomlc research, of little direct relevance to ponsibilities to the country as a whole. ’
small enterprise> rhemsel\.es or even to attempts . i‘he pages which follow include a number of
to ajiist them. The Birla Institute of Technology case studies of enterprises which have -been
!~a>, hoi+sier, rho\\n that it is possible’ for a established through the work of the programme;
uni\ers\r> ot‘ high aca’demic standing not only to this enables the reader to see the programme
pla~ a parr in jmrtll rnrcrprise, but actualIt to through the ejles of the individual entrkpreneurs
’ promore large numbers of technicallp advanced who have ‘benefited from it, and this is .a far
and I Iable independent small businesses, which more cogent,demonstration of its value than any
N ould ne\‘er ha\ e been started ivirhout the inter- description ,of the programme itself. It should -
i.enIion of the Institute. never be suggeste,d that this, orzany other pro-
It \vill be slear to the reader of this book that gramme, provide’s a blueprint which can be
the major single element in this remarkable copied by other ienstitutions elsewhere; it is
success story has been the enthusiasm, commit-’ rather-a source of ideas and inspiration, which
, ment, and ability of a smalL number of individ- should be of value to anyone who is involved in
. uals. People of this sort are perhaps the scarcest the promotion of small enterprise, or to anyone
resource anykvhere, and it is tempting to con- responsible for a technical training institution
clude that wi”thou’t such people nothing can be who recognises thai it must, if only in the interest
done. There are, however,-a number of lessons of its own survival, start to make some positive
bbhich caq be learned from this experience, impact on the small business sector. ,:
lvhich could substantially imp‘rove the opera- s3
tions of existing small enterprise promotion Malcolm Harper
prbgrammes or form the basis for new ones else- Cranfield School of Managem’en t

,

1 INTRODUC?IONI(
The’characteristics of small enterprises dpvetail
well ivith the socio-economk objectives otlfiany
Of e deireloping ,$ountries. Generally, theyare
la r intensive, employment generating,,capi-
tal saiing, and capa&le of operation on a decen-
tralised basis in rural areas. In countries which
are coiiacerned ivith the generation of“thotisands
of ne\+ \\.orkplaces - especially in the rural areas
- and with.raising the incomes and quality-of life
of the poorer sections of the population, small-
scale induhrrialirarion offers a far more appro-
priate alternati\,e to industrializatipn strategies
that emphasise large-scale, centralised indus-
tries, \ihich until recently Lvere favoured bq
de\.elopment planners and practitioners. The
ij\ueh ot’ \\ hether or not the technologies appro-
priate to small-scale industrialization esist and
\\ hether the!: are as economicall$ and technicall>
efficient as the la?ge-scale ‘alternatives have
already been \+ell researched. E;.idencc suggest5
thaf a aside range of technologies do exist and
that, in a majority of cases. the smaller-scale
technology ii juhr aA effigient as the la;ge+cale’.
.4 more recent issue is that of ho\\ to go about
enabling the iiidespread adoption and use t
theAs rechnologie5. To a certain esteht, this ! s
one and the same ishue as finding appdgpriaic
v+ays of de\.eloping and promoting thextiall-
xale industries I+hich are the social carriers of
thehe technologies. On this issue, very little
empirical data are available. hlany huggestions
ha\,e been made as IO what may or may not work
in respect of supporting small-scale industries.
In practice, there are \‘ery fe\s examples avail-
able of well thoughL-out models which.have been
effecti\.ely implemented, This ‘report, by des-
cribing the nature and im$a,ct of the interesting
and successful “model developed at the Birla
Institute of Technology (BIT) in Ranchi, India,
aims to add to the yery small body of literature
a\,ailable \;,hich can she\\, what is involved and
what can be achieved in the development and
r
’ See: C‘arr, hl. Econotflicullv Appropriurr Techno-
lugiesjor: .4 II .4 nnolareci Bihliogruph>: Dei,eloping
,C‘ountries (see Biblography) and Jenkins, G..iVon-
.-Igricwltural Choice qf Techniques. .
*
I
1 r.i
: ‘.
1
p’romnotion of small industries. It is hoped, this
will be of assiit’ance to those wishing-to start
, ’ -A
small industry prpgrammes elsewhere.
BIT’s involvement started in the early 1960’s “* ’
when its fou’nder, Mr B.hi. Birla, formed a
Department of lndustrial Research, to
an awareness of the needs of industry
gchnical students throu@ work on projects of
practical use to neighbouring industries.
Later, Lvith tin iQdustria1. recession, growing
unemployment! among qngineering graduates
and a change itn government emphasis towards
the development and’ support of small indus-
tidies, the ChGirman of BIT (Mr G.Y. Birla)
decided that t,he Institute’s resources should be
extended to t e develqpment of entrepreneur-
ship among B 1T grdduates and the promotiop of
small industr es to be run by them. This me&
setting up a w rking group wititin BIT to man an ’
orgapization E ‘hich could provide all the neces- \
N
sary’ i uts for the development of’*small-scale
eng,ine’ ring units. The inputs were to cover. the r
entire P pectrum from laboratory-scale research
to the droductiRn of comkercial prototypes and ..
cot!tinuing technical -assistance for industrial
productiog. The , organization was also to pro- ’
\,ide akistance t or flnanclng arrangements and
marketing. ’
’ Such an organization (SIRDO? was <stab-
lished in 1972 and started \vork in a5mall way
with funding fro the Birla Institute oc Scienti-
fic Rtlsearch (BISR’ -9wBd staff inputs from BIT.
&There folloived two .major inputS’\vahich, liphen *
integrated \\,ith the ideas and techiiical expertise
of the BIT staff and the facilities made available ’
throu’gh BIT and BISR, helped the scheme
expand and thri\,e. First, the ‘United Com-
mercial Bank agreed to. finance the ,snral,l units
sponsored through the scheme without the usual ’
constraints regarding collateral and financial.
contribution from theentrepreneur. Second, the
Gob,ernment of Bihar, recognising the relevance
of the scheme to its own industrial de’velopment
,
2 SIRDO: Small Indu.stry Rexarch and Dcvrlopment
Organization. _’ -
’ BISR is lhe.unit. within thk ‘Birla group which is ’
responsible for industrial research and commercial
rksearch and development I+ark. A few administra-
li\,e start‘ are based in Calcutta but most:permqnen!
BISR stat‘f’are located in the four small-scale ir+s-
rry schemes in Ranchi, Allahabad, Bhimtal and
Jaipur, the Economic Research Division in Nen
Delhi and the Paper & Pulp Division at Amlai. -.
 objecrikes. agreed to proi-idc: sheds and ivfra- , merits, ,,ass&‘tance with raw material procure-
strucrufe for an industrial estate from ivhich the ment aRd FTketing, entrepreYneutia1 trainipg,
entrepreneurs could operate until they had covd p&kon of central facility wo,rkshogs are
t‘idenz and re>ources enough tb rno1.e off on things \vhich are widely available throughout
their CIMII. India. The uniqueness of the Ranchi model is
Thexombined effect \i as the establishment ot that it borings together all these essential ingre-
\s\eral tlourishing small-scale industritil units. dients of a successful progra-mme under the
So iinpressed \+,as the Goi,ernment of Bihar bvith direction ot a single working group. By success-
the SIRDQ scheme that, in 1977,/78, bvhen’it was fully combining the efforts and resources of a *
looking for \\a!.\ iq\\ hich to allocate the funds technical institution,a scientific research institu-.
pro\ idrd b> C‘entral Go\~&ment under the tion, a financing institution and the Industries
‘Halt‘ a Jlillion Job’ Programme, it decided to Department of the G.overnment it has become a
g~\e increased t‘inan~ial Aupport and also to’ classic example of h.ow.to approach the problem .,
dircir that all tcchni~al inrtituteb \\ ithin the State in a truly integrated way. By dding so, it als‘o i’llu-
\hcJuld \tart ,imilar- programmes. It \\as thus minates the extent to which services and facilities
that an idea ConceiLed In the early 1460’5 e\.en- lack integration e.lsewhere.
tuall! became translated in 1978 into a State Third, the scheme is concerned as much with
Go\ crnment-sponsored l programme known as thiz development of entreprkeqship as it is with
the Smill Indu\trir\ Research Training and that of small industries. Set in .thk heart of
DC\ clc~prncnt Orqr>ization (Sl RADO). Bi@r’s tribal b,elt, the lnstituie is wwk
.! parrliularl! intr’re4tinp aspect of the.It xhyme cnk.iror1ment where &et-e is no tradition
I\ th,it II hag it4 root\ ing technical in~titure &l-d ,-prtk&rship and \‘ery kgligible growth
ir \hov. \ hLl\\ a small group Of. teachers-within L’ and small-scale industries. Iri addition, it is de,aJ- ’
YLI~+an Inbtitutt ian de\clop and implement a.. ing \\,ith technical graduates who, besides having
\\ orkablc‘ ylod:l t‘c;r jmall Industr)~ promotion. no commercial background, ale conv-entionally
-‘\p;irI from [hi\. there arc‘ three feature5 of the more inclined to seek out the status and securit) .,.I
\ihcrnc 0 hiih art‘ particularly worth>, ot‘ atten- of employment iii established oiganizations. By
Ilorl. Thc\e r<l;trc 10 rt’plic’abilit~, integration jho\ving how entrepreileurs can be identified,
arid CrirreprenCuriaI de\ clapnicnr . moti\fated and trained in the face-of these diffi-
t.lr\[, the model form\ the ba\i\ for starting culties, the sc’heme makes a very real contribu-
\lmtlar bihcm>j elstx here and can pro\ride tion to the field of small industry development,
guideline\ to government> when planning small- gi\.en that lack of entrepreneurship is so often
scale indu\triallzation programmer. Apart from cited as being a major: impedimer!t.
1he in\ 011cmeni ot’ the Bihar Go~~ernment in 4 pL.4far as possible, the >r;,port concentrates on
u ~rrengthening the Ranchi scheme and in funding these key themes of replicability, Inlegration,
thC\erring up ot’ t‘i\,e 5irLilar Cent ‘c5 in the State aiid e[ltreprcneurial development. Si.nce iI is
I hc. C;o\ crnmenl in ’ ighG!;lrirlp ‘s’tatf oi important to look at the scheme within th,e con-.*
L:trar I’rackh ha<h cogni\cd the eft‘ecri\,c- \ test of its geographical, econo.mic and soqial
nt‘\\ 01‘ the programme and, following a \l.\it to enviro_nmcnt, Sectiori L ’ gives a brief account of
the Ranchi centre, ij planning to give financial the Bihar econoiny and.of the. numerous pro-
,upporr to the BISR centre located in Allahabad.’ grammes and facilities which-exist-toassist-small
.4dditionally. the United Commercial Bank has Pnterprises. Section 3 lool& a! the history,
found the model work4 so IveIl that it is noI\ growth, objectives and methodology of the
ttncouiaging technical institutes in other state5 to scheme, while the way in which it work’& is
e
copy this and is offering to give financial sup- further expanded in Section 4 by means of seven
port IO small entrepreneur) spgnsored through cas,e studies. Section 5 attenipts to assess what
such schemes. can be learned from the scheme and compares it
,4 second point is that the model has been built N,ith the performance gf related centres eise-
up largely b>, planning for the more efficient use inhere in India. Section 6 looks at SIRTDO’s
of existing resources. FaciliSies for the develop- work on Tural industrialisation and rural devel-
ment of laboratoyy and cowercial prototypes, opment. Finally, Section 7 presents some major ’
testing facilities, favourable banklng arrange- conclusions and recommendations.

2
It
 . \
migration in search of work is a regular:featu&. a -
k This situation exists iii spite of th,e fact that the
plateau is India’s primary source of high quality’ ‘. ,
mica and has rich deposits of ‘iron ore, coal; )
2 THE ENVIRONMENT FOR\ coppef, chromite, manganese, bauxite, steatite, 4
: SMALL-SCALE ’ ‘b+,asbestos and kyanite. Although Bihar’ac$ounts
INDUSTRIALIZATION IN= ‘Vor 44% of the total mineral production in the ,*
C(B ntry, the development of these resources has
BIHAR STATE notK Jbeen benefic’ial in terms of providing
emplkent and increased incomes for the
3
majority-of rhe local population.
EJackground About 50$‘0 of t‘he total land area of the State .
The State of Bihar lies in the eastern part of the is under fodd crops while a further 17% is
country and so\.ers’ an area of 175,000 km’ covered by forests. Principal food crops, grown ’
\+hich makes it the ninth largest State in India. In are srics, wheat,?naize, ragi and pulses, while
terms o‘f pdpulation it ranks second (next to cash crops grown. b n&t of sugar cane, oil
Uttar Pradesh) among all the States, \vith seeds, *tobacco and .ju%. The main forest pro-
56,353,OOO people in 1971, and has a high den- ducts are Gmber kendu leaves, gum, sal seeds,
sity of population kvith 324 people per km’ as resib and-10~. About 59% o.ff the State’s Gross
compared with only 182 people p,Fr km’ for the Domeszic Product arid 80% of the workforce are
country as a I\ hole. 904Toof the total population accounted for by tbe,.AgriculturaL,and forestry 1 :
is rural as opposed to 80Fo for India. The srhed- ,, .
. ,*+ ,
uled iahtrs and tribes form 14”o and 9”o i’esper’- weal& of tb$ F!Qte has
timely ot”the total population o$thFState, ahd in led to the setting’ mariy large and medium
some districts, such a3 ‘Ranch?, the scheduled industries based o hese resources. ’ TheSe
tribes account for asmuch as 6OTo of the popula- incltide: Bokar Ltd, Coal India Ltd, .*
tion’. The le\,el of literacy is lowFJbeing onl? Uranium Corpo f India Ltd, Tata Iron .*
19.90-o of the population in 1971 a$“,opp&ed to and Steel Company, Tata Electric and Locomo- :*,.
29.50’0 for India as a ishole. tives Company, Bihar Alloys and Indo-Asahi __’
The State combrises t\vo distinct and almost glass factory,,T$here are also t,wo fertilizer fat- !
equalI!. sired topographical units, namely the tories, in oil-refi&ry and”severa1
... cement fat- ‘. .O, .
plains and the plateau regions. In the ndrth,.the tories,’ disfilleries, mi& industr:&,. ceramic’ .,,
flat plains are dii.ided by the river Ganga into the industries and &e and jute mills. ’ --
North Bihar,: Plain and the South Bihar Plain. There are se?&-al thousand small-scale induG
The soils are rich and alluvial and the area is : ;r-ies in the St,ate, which’a!e involved in-a wide
agricultuially prosperous. However, the very range of goods but concerned mainly with metal .-
high population density (489 per km: in North products, wood products, mineral products,
Bihar Plain and 392 km’ in South Bihar Plain) machine tools and repairing, and servicing. 1
means th,at agricultural holdings are veiy small There are also a number c$lmg-standing tradi-
and per capita incomes are very low:. t’ional craft industries-of which p&;haps the best
The plateau region of Bihar, known as the kngtin is that based on iasar, a variety of wild ,
Chotanagpur plateau, covers almost the entire silk. The mining and manufacturing sector
southern half of the State. Here the soil is less accounts for about 23% of the Cirosi Domestic
fertile, but the population is less dense (178 per Product of the State. However, due to the pre-
km:) and agricultural holdings ar& larger. dominance of large-scale industries, it &counts
Drought is common, irrigation is sparse, 2nd ;-
for qnly about 8% of the workforce.
given the shortage of non-agricultural employ- The State lies on the arterial rail and road
fient opportunities in $he region, seasonal routes-conneciing all major production and con-
sumption centres of the country, although the
’ The tribe, are the aborigina! people of India, often ’ plateau region is t%tter served in this respect
living in isolated areas and frequenttg negleaed or than the northern agricultusal dist&, Most
disadvantaged by the development process.
-8 ed with electi’icity
’ The average per capita’income would be even tower areas of the State are prove
without the impact of a feq wealthy families who- although only 2OYo of villages had actually
own a large proportion of thk land. received ‘electricity by 1975 as compared with
I -3
I ^i
J 3
w ‘t * . 2
, b
 .
.
29% i~f vmillages for India..as a whole. kosral and been lost in these small units, due to, power
telephone servi,Ces arc fairly widespread .shortages in 19% - IYIN)‘.’
although rhey ahpear to be somcwha[ erratic.
Similarly, small units’ .have greater trouble
There is a network of commercial bank branches
than large indusrries, in securing ‘adequate sup-
in all towns and a fairly good network in the
plies of raw materials al government-controlled
a Jural areas.
prices. They are also less likely to be able Lo
In order ro set the,problern of small industry
slockpile raw materials as a guard against infla-
dcv,elopmerit in coritesr, there arc a number of
tion. This is a disadvantage, given that rhe prices
._ key t‘carures abour the economic environment
of basic metals - upon which many of the Slate’s
which nt;ed IO be srrcsscd.
. small industries rciy - have more Itian quad-
k‘irst. industrial dev,clopment in Bihar slartcd .
rupled in rhc lasr six years.
1% ith estractiv,c industries, t’ollowcd by heavy . 7. .
metallurgical industries. I( vc’asnotprectided by
Policies for Ihe promotion of small-scnle .
rhc dev.eloprncnr of light &pita1 goods or con-
induslries
sumer goods indusrrics, as generally tiappcns in
L..ikc all orher States, Bihar has its own policy
the process ot‘indl~s~riali~ation. While thcdcvcl-
framework for industrial development and irs
opmenr-ot‘ I hc rnincral indus(ry has been bcncfi-
/I. own package of policy nlcasum-~l’sF~~p~~~jgg~_~
small-scale indusrries. While these. generally
follow rhc broad guidelines set ou’f by Central
Govcrnnicnl, (tie il~iplel7icn~aliorl of assistance
programmes is (he respansibiliry of rhc State
<;ovcrririienl.
As will bc sc’cn in rhc following pages, ltiere
csisls a rnul(itudc of ins?iiutions, facilities and
inccnrivcs which theorc(ically should mccr
almosl cvcry riced and problcrn which a small
c~irrcprc~icur;coiitil face. Indeed, rtie small cnlrc-
prcncur in 13ikar and elscwhcrc in India appears
lo bc positively pampcrcd in comparison lo
lliosc iI1 olticr clcvctoping counirics. Lri’praclice,
,,howcv~cr, d,cspitc conslanl evaluations and revi-
sioii5 in small industry programmcs, many small
cnlrcprcricurs (cspccially ttiosc in indirslrially
backward arcas such as many dislricls in Bihar)
scciii 10 tiavc grcal lroiibtc iI1 rcaliziny Ihc polcn-
rial bclicl‘ils irr\~olC~ccl.This diffcrcncc bclwccn
theory and pr’acticc is an irnpc;r(anr one to bear
in mind. : Y
: . ./
Sluk c0rporution.s
Ttic CiovcrnmcnI of Bihar carries oul lhe dcvci- .
’ I’owcr shor tagcs ha\ c hampcrcd growl h and opmenr and”iniplcnienraliori of small industry I
also t‘clrccd rliai;y cnlrcprcncur-s lo cil her programmcs through‘thc LIirecrorarc of I’ndus-
close dcl~ ii lhcir iiriils, stash procluclic)n, or lries al l’arna (headed by (hi? Indilstriat Dcvelop-
rclrcncti cniptoyccs. Small units are lhc worst mcnr -~‘ommissionel/i~ Under the LXrccrorate ol
casualtics of lhc power famine. According io Indusrrics arc rhirty:rwo Srarc Corporations and
rcporls, prod,uc~icin worl h K4 I S(K)lakhs has Agcncics to which have been delegated many of ~~,
(he csccurive functions relating IO industrial
devcloprnent. These are autonomous bodies
wirh Boards made up of relevant public and
privalc scclor rcL7rcscnlalives who niaiiage lhc.
Y4

.
‘4
 .
P’

.
 ” Corporations ivithin the guidelines set down by District and then the’State level. Second, while
the State Co\.ernmenr. The Industrial Develop- all’ assistance measures within-an IADA were
ment Commissioner is Chairman of many of available from one place (@e IADA mariager’s 3
these Corporations. office), entrepreneurs located elsewpere had to
Of ‘qarricular rele\,ance to the small%cale rl;‘n around to several ggencies, many of them ,
industr!, sector arc the Bihar Small-Scale Indus- away from the District, in order to get the same
tries Corporation (BSSIC), Lvhich offers assis- assistance. In an attempl to improve on this, the 1
tance \+.ith ra\+’ materials and marketing; the District Industries c&cr” (6ICj scheme was -
Bihaf Stare Financial Corporation (BSFC), introduced in &lay 1978 whereby all assistance
which offers rnediwl: and long-term loans at measures would be available to all entrepreneurs
f‘a\ ourable interest rates to small entrepreneurs; (outsid-e IADAs) from one agency (DIC), to
the Bihar State Export Corporation (BSEC), which had been delegated suitable pqwers of
u hich competes in the international market and implementation. Every district in> India was to
obtains orders to be supplied by small firms; have a BIG and two hundred were’s& up in
and the Directorate of Technical Development 1978179, of which.ei’ghG?en are in Bihar State.
(DTD), which offers funding for individu-al
research and dei,elopment (R 8: D) projects and District jndustry tentres
prepares project profiles aimed at assisting The District Industry Centre (DIG) Scheme is #
entrepreneurs to star-r small businesses. kvorth looking at in more detail both because it is
an interesting initiative in its .own right and ..
Industrial areu de\le/opt?!ent authorities because it ties in quite closely kvith the daily func-
? In addition, there are six Industrial Area De\.el- tioning of the small-scale industries sponsored
opment Authorities (1ADA) located in Ranchi, by SIRTDO.
Patna. Jluraffarpur, Darbhanga, Jamshedpur Basically, the DIC is an institution at the dis-
and Boharo:. These ha\.e responsibility for the trict le\,el kvhich aim tb provide in one place ail _
d’ee\elopment of industrial areas and construc- the services. and fat flities ivhich are needed by
IIOII of induirrial estates including ancillary, entrgpreneurs for setting up small-scale and
t‘uncrional and rural industrial estates. Their ter- \,illage industries. A-sistance includes identifi-
ritorb i, limited to specific areas around ,. tokns. cation of a suitable i scheme, preparation of a
\+hich are deemed by the State (;o\ernmetit to be feasibility report:, arrangements for supply of
* ‘ indujtriall!- important. Ff’ithin their area, the> machinery and equipment. provision of ra\+
I hale authority not only to deL,elop infrastruc- materials, credit facilities and inputs for market-
ture. but also to pro\ ide a package of ser\,ices to ing and extension services.
prospeLti\c entrepreneurs for setting up a unit. When a potential entrepreneur’first approaches
The\r \er\ ice\ include registration, .interest, the DlC, he is seen by ~l~-Qono&c lnvestiga-
capital and po\\cr jubsidicj, and \,arious licencel- tion Manager \vhQ disc$&$&~t’h”~~rn proposed
arid iricenti\e~. items for produclion. Follo\ving this initial
Lriril \la>’ 1978, entrepreneurs wishing to enquiry and invesrigatiop process, the potential
locate a small-scale industry outside of an entrepreneur can prov$ionally register with
IADA’s territory did not have such.easy access” the DIC and start looking for land on which to
IO government assistance. There were tLvo rea- locate a factory.
son\ for this. First, while necessary inputs could The nest step is to draw up a project proposal ’
be provided on the spot liithin an IADA, po\ver for appraisal by the Credit Manager of the DIG
IU grant subsidies and incent.i\.es to entrepre- who for\vards viable projecz to the State Finan-
neurj located else\+ her-t? remairied Lvith the cial Corporation (SFC) or a commercial bank
Directorate of Industries in Patna, thus for funding. Although the DlS.appraisal m&h-
in\ol\ing an elaborate process of referral to the anism is supposed to be sufficient, the banks
often turn down projects f’prwarded through
, this channel br insist on substantial ?hanges
’ The Kanihi Industrial ‘Area De\rlopmenr Authority before funding is given.
(RI.4D.A) ha5 parricutar relevance to rhe SIRTDO Otise - funding
. is obtained, advice is. given on
schcrne. The manager yl’ RIADA is a member of. where to purchase machinery and equipment
SIRTDO:s manaping commirrec and \e beral of the and, when the salall business,,is running, the
SIRTDO entrepreneurs are locared on Twudana *entrepreneur can thgn use the services of the
Indusrrial E5tare \s hich is managed by R IADA. ~ managers dealwlg with raw mater%1 p’rocure-

.6
ment, marketing and technical information, as training can be given to industrial workers spon- :
required. sored by small industries.
Registration lvirh the DIC is enti.rely volun- With respec~.to~a-tketing, the SlSl can offer
tary bul unless this is done no go\.eriiment assis- advice on choice of products and divetsificBtion
tance can be claimed. Incentives available to of production. It has ais6 set up sub-contract
small entrepreneurs thro,ugh the Dlc include an exchanges to help small-&ale industries market )’ . L
interest subsidy, a capital subsidy and power their products to large-scale firms on a conttact -
subsidies. Any small indu%iry bvhich runs into basis. .” .o
sei’ere difficulties can appi’y to the PIG to be Y .’
,-
registered as a ‘sick unit’ so as to gain access to Central government R & D ind resting frrcilities
additional benefits and incentives. Finally the The Central Government’s National Libora-.
Dlc administers the scheme of the Industrial tories, the National Research and DF.vvklopment
De\elop&ent Bank qf India (IDBI) which gives Corporation, and the various Tesiing Fqcility
‘seed’ money to a+sist.,netv units ivhich satisfy Cenrres are also important. The National Labo- .-
national priorities and \vhose promoters have ratories, of which there ate twenty-two through-
insufficient funds to meet the nornlat level of out the sountry,.provide technical facilitiesan+---
contribution required by the comme;cial bank’. staffpfor developing laboratory and commercial ,
prototypes and processes relating to all types
Smull irldrtsrr>. ser\lice instirutes and sizes of industry. They ‘are also suppos’ed
In addition to State schemes to assist small-scale to’ deal with specific technological problems
entrepreneurs, there are also some Central referred’ to them by individual entrepreneurs &,-
Go\ t’rnment Achemes. the most notable of kvhich through the DIG, SlS.1, or other promotional
ih [he Small Indu3tr). Ser\~ice’Insti4utes (SISI) agencies. Each btaqch concentfat$s on a specii‘ic
Programme. In Bihar there are SlSl centres field such metallurgy, ceramics, ph:!rmaceuti-
located at Palna and Ranchi and branch ofifices cals or textiles. ’
located at Jlulaffarfiur and Dhanbad-. The Any commercia! prototype:.developes by the
main function of‘ these InstltuteA is to prbi,ide laboratories ,is handed over to -the National
ethnical, economic ,and lfianagerial consul- Research and Development Corpora.tion in New
ant‘!’ to the pr0spectii.e entrepreneurs for siart- Delhi which is the ag’ency responsible for
ns, expanding and muderniting.theic units-- lirencing the prc~c~lf,_a sma-II-scale entrepre- ~
SISI ij in general suppaed to work as’an neur wishes to’purchgse the licence or a process,
nt‘ormation centre in ail technical matters relat- 5090 of the cost involved is refunded by the
ng to small industries. Sometimes, ,necessar> government.
adi,ice and assistance can be given by the SISI i Once an-entrepreneur has purchased.a licences .l
technical staff, but ‘normally requests for speci- and set upa business on-thy basis of a NRDC
fit rechrlological assistance are referred to the process, he is supposed i& bP able+ to refer any ’
rrle\ ant National Laboratory or another appro- ‘teething troubles’ to the I’?Mional Laboratory at I)
priate technIcal institute. ivhich the R &.D work t&ok place. In practice,
The SlSl also nrganise5 training courses for however, entrepreneurs seem to t$ive difficulty
small entrepreneurs and their iiorkers. Three in.making use of this facility because of d&ant
month entrepreneurial de\,elopment courses are location and lack of personal contact.
run for unemployed youth. Preliminary and, Finally, testing ,centres for the engineering, .‘_(
ad\,anced courses for entrepreneurship dei,elop- metallurgica!, chemical and electrical trades 8i%j ‘:,..“*;
ment are also arranged for students, kvomen,:’ available in Calcutta, Bombay, Delhi atid i*.
scheduled castesitribes and other weake,r sec- adras. These centres were established in an .
lions of the community., Additionally, tec;hnical empt to provide testing facili!ies which would
enable small industries to1 produce goods con- ’
’ As t+ill be wcn in the l’ollo\sing chapters. the
forming to the Indian Standards -Institution
SIKTDO entreprineuri (other than those located on
(ISl) specifications and to provide testing facil-
Tupudana Ejrare) register \tith the Kanchi DIG‘ so jties in accordance wi’th the requirements of the
that they can claim government assistance. They also ‘purchasing agencies of the State and Central I
utilire the wr\,ices of [he raw material and marheting Govern’ments. These work fairly’wel.1 except for ‘1
managers. t the fact that many of the country’s s’tiall entre-
’ In all, there arc‘ \i\[ccn Injrirure\ and nincfeen preneurs ate located at some distance from the
Branch Instilutes in India. 7
s
centres. This is particularly inconvenient for
/
1,
7 , 0
0
1
 r z-7“ :-

’ ”
entrepreneurs who hav,e a product which needs a who set up a successful business after aft&ding” --
quality control certificate for every. batch or government funded. Entrep~!~e$al Develop:
ev’ery item. ,. -- ment Programmecouaes ,is thought to be v&y h .
small indeed. j ‘.
Cenrral Sentice Faciliries With regard to the high incidence of sickness
There are a few central service facilities which among small units,?t is commonly believed that
are located .on or near an industrial estate and one of the major difficulties ik the lack of good
are managed either-by. SISI, an(rADA, or more advice given to entrepreneurs on the choice of
recently a DIC. .These central facilities aim at product, the choice of technology, and the ways
helping small entrepreneurs to compete on equal of changing technology to deal with changing
terms with larger firms by providing them’with cond$itions. Part of the problem, of course, is
access-to the sort of laige, expensive machines that the prom&inal agencies such as.33 and _
vvhich are needed on an occasional basis, but DIC have frittle or no R & D capacity. Thus,
-*iy,hiichan individual small firm could not afford while the staff.are*involved in helping entrepre-,
tb buy. neurs to choose products and technologies, they
Theoretically, this is an important type of are not actually involved ‘in technology dexi-
;institurional support for small firms. Again, opnient themselves and the information they
7hovve\.er, entrepreneurs seem to have difficulty pass on to theentrepreneur issecond-hand, non- r
in making efficient use of these facilities. Prob- specific and possibly out of date.
lems cited by entrepreneurs include inadequately Similarly, if a small industry needs techno-
jroched wcrkshops, uninterested and insuffi- logical help to diversify production, upgrade
ciently skilled staff, time-consuming bureau- quality, or reduce co& in order to remain com-
cratic procedures in>,olvfed in use ofthe facilities, petitive, the promotional agency can normally
and an inability to be able to make use of them at only assist by passing on the problem to a
the time needed. National Laboratory or othef technical insti-
tute. This is a non-personal, non-immediate and d
often non-efficient method of diagnosis which q
This institutional frameworh is both elaborate rarely leads to the prescribing of. the optimum .I
....
and iostly.. Howev,er, .the impact in .terms of solution for each individual client.
\mall industry de\,elopment and promotion is A contributing factor to the problemof main- ;‘I-
not all that could have been hoped for. For taining-a competitive position is thodght to be .’
instance, only people liv,ing in areas where entre- the difficulty experienced by many small entre- _:’
preneurship has always flourished have been preneurs in making efficient use of government’
best able to make use of the incentives beinga testing centres and central facility services.,
offered to small industries. In other areas,“’ ’ Finally, the difficulty, experienced by many
similar or even greater incentives have been potential entrepreneurs in actually getting
of‘ less use because al’ the absence of effective started in business is also thought to be’due to a
programmer aimed at identifying, motivating lack of good advice given in respect of identify-
and training entrepreneurs. In addition; an ing and developing good projects. As was men- , Tp
unknown but undoubtedly high proportion of tioned earlier, the State Finance Corporation’,
small enterprises fall sick or never really get and the commercial banks often refuse to .pro-
started, despite the institutional framework vide credit to a small entrepreneur whose project -
dev,eloped to ensure that they survive and has been approvedagd forward&by the promo-
flourish. tional agency. More -often than not, this is
W’ith respect to entrepreneurial development, because tt?e Bank’s own technical assess’ment
the problem seems to be that when programmes committee (despite the favourable assessment of
do <exist, they’concentrate heavily on training the promotional agency)‘feels that the project _
an&often completely ignore the need for iden- would ‘not be viable. Again, this points to a lack
tifying and motivating potentially suitableentre- of integration between the,various arms of the
preneurs. When training is given, it tends to be support mechanism. l

theoretical in nature and is of limited use either Within this context the model devgloped at the
--in terms of assisting determined trainees t.o deve- ‘Birla Institute of Technology seeks to do two
lop entrepreneurial skills or inJt.erms?f convinc- things. First, it aims to showthow entrepreneur- 8.
ing the less-determined train&s of the wisdom of ship can be developed in an area and among
starting a business./The proportion of people people where it, is traditionally lacking. Second,
3ret‘ P

r.y
i 8 ’
 it aims to show how the development and pro-
motion of small industries can be approached in
a more integrated way.
. As will be seen in the following chapters, the
‘group of five.B,JT’teachers who are involved in
the scheme are a rather special group of people.
Of equal relevance, hovvever, is the fact that
they are heavily involved in every aspect. This
includes identification, motivation and training
of the entrepreneurs, advice on choice of pro-
duct and technology~:development of laboratory
, posed projects on behalf of the bank providing
loans, and provision of on-going technical guid-
ance and assistance.
The impact of this last function, which aims at
helping the entrepreneurs to maintain a competi-
tive position, is increased by the provision of
conveniently located and efficiently .operated
testing .&d central service facilities.

..
*

c
 r \ : ’

materi& power rnts and changing -market -~~~~.-

conditions is difficult because of an inability to
get adequate assistance in adapting machinery ,,
or processes.
3 DEVELOPMENT OF The BIT engineering graduates who have been :
SMALL-SCALE INDUSTRIES: assisted to start small industries have benefited
AN INTEGRATED from a unique scheme iYhich integrates the IL&----?
L APPROACH
D and promotional side of small industry%level- ’
opment and by doing so increases the,efficiency, i
of both, The total effort can, in fact, be divided, /
into three distinct yet overlapping parts, namely
History an+grdwth - technical education and research and develop- ,’
3
, If you travel ft;om Ranchi town along the road to ment of laboratory protot-ypes; development of /
I Hazaribagh j;rDu-will reach, after some 16 km, a commercial prototypes and processes; and spon-’
hive of activity in the midst of an otherwise soring and promotion of small- commercial
peace-ful--rural area. Five years ago ‘-there was industries. Broadly speakjng, these three pairs
nothing here ezcept a narrow road turning off to are catered for by three institutions - the Binla ,
the Birla Instituteof Technology which lies 4 km Institute of Technology, the Birla Institute of
away in the midst of the Sal forests. Today, just .Scientific Research, and the Small Industries
off this turning, there is a flourishing industrial Research, Training and Development Organisa-
estate and a cluster of s roadside cafes and tion. There are no fixed boundaries marking
sl~,ops which havegr ,--“R’ vn up to service it. where the responsibilities of one institute ends .
,4lrhough,it--may look normal enough, this is and another begins: in fact, to try to define the
in @act-% from being an ordinary industrial role of each institute would be difficultsince the .)
_-
--estate. In particular, the eighteen factory sheds same,;people tend to be involved in eac.h.‘.How-.
___---,.--
areaall occupied by young engineering graduates ever, a word ar two needs to be said about each
I t,from the Birla Institute of Technology and they institute separately before we can understand
are all running businesses sponsored by the how they fit together within this Lintegrated
!Small Industries Research Training and Devel- approach to small industry development.
Bpnient Organisation.
f The story behind the development and pro- Birla Institute of .Technology
/motion of these small businesses is a fascinat- Founded by the industrialist Mr B.M. Birla, Ihe.
‘:ing one in its own right. Of more importance, Birla Institute’of Technology (BIT) was estab-
h’.owever, is the fact that-, at a time when govern- fished as an all India Institute of;Engineering
mental. and non-governmental agencies and Research by the Hindustan Charity Tiust in ._I
throughout India and elsewhere are looking for July 1955. The Institute offers courses of study
approaches to small industry development and provides research facilities in various dis:
which actua,lly work, this scheme has thedistinc- ciplines of engineering, technology and science .
tion of being one which is successful, worthy of leading to undergraduate and post-graduate ”I
detailed description and, it is hoped, eventual degrees up to doctotate level. Practice-oriented ,
replication. :
post-graduate diploma courses are also offered
As was seen in the p:evious chapter, a to cater for the needs of industry. For the pur-
common problem with small entrepreneurs in poses of the present study, two aspects of BIT
India is the lack of advice on choice of product are of particular importance. First, since 1972 :.
and assistance uith selection and adaptation of the Institute has been autonomous, with powers
technology. As a consequence, production of ~Uffa~Itsewna~ic~~and CCGjdUCtits
sophisticated products is ruled out for most own examinations. This has given it a great deal
small firms because of lack of access to R & D more flexibility than the rest of the technical
facilities; and promotional measures relating to colleges in the State which are all controlled by
the acquisition of raw materials, subsidised government’: Second, the Institute’s edu&tional
inputs and preferential purchase, are of limited. policy has always had a slant towards practical ’
use to a small firm competing in a market which, application of learning and has stressed maxi-
because of ease of entry, is already flooded by mu’m esposure to,in.dustrial processes.,
other small firms. Further, flexibility of pro- With the aim of increasing its ability to guide
duction So as to cope with shortages of raw students into using their talents in ways, which ’
‘*
0
were most. appropriate to local needs and cir- appealed because it was a way of turning job
cumstances, the Institute formed a Department seekers into job creators, thus tackling the prob-
of Industrial Research in 1964. Initially, the lem of unemployment among technical grad-
ivork of this Department, vvhich drew upon the uates and at,the same time creating employment
talents of v,arious faculties in the.Institute, for their semi-skilled“and unskilled workers.
took
the form of conducting surv’eys in nearby heavy BISR therefore decided to create a Small
industries and gov’ernment establish.ments. Industries Research and Development Organi-
Before this, industry and academic zation which would conduct R & D of devices
institu-
tions had not discussed hovi they might uork and processes for commercial esploitatio’n tind
together. assist technical graduates to take up the manu-
Gradually,, the surv’eys revealed that much facturing opportunities thus provided by
equipment in local hea1.y industry vvas idle for becoming small-scale entrepreneurs. Special
lack of critical components vv.hich took months emphasis was to be placed on R & D, which
to arriv,e from ov’erseas. Therefore, it was
would assist in establishing industrial units for
decided to inv.estigate the possibility of produc- the production of imporksubstitutes or items for
ing machines and components vvhich uprto that export.
time had only been av,ailable from abroad. Once ’ BISR allocated funds t&oestablish four centres
projects \sere identified,- final year stu.dents were to carry out this work: at Allahabad, Jaipur,
set to work on them. At this stage, the heavy Bhimtal and Ranchi’. In each case, the funds
industries in the area were merely interested were for construction of a building, salaries for
observ.ers and contributed no’more to the experi- permanent technical and support staff, and pur-
ment than indicating th&r current problems vvit h chase of necessary machines and equipment for
idle machinery. LO
prototype and process,development. It’was only
Hovve\ er. by the early 1970’s hea\;> industry a>.Ranchi Centre (which is adjacent. to BIT) that
began expressing an interest in trying out and the applied R 2%D work w’as completely inte-
purchasing limited quantities of the items which grated with the work of, a technical i.nstitute.
BIT had shov+-n \\ere capable of local produc- Thus, the w&k of BIT and BISR became part of
tion. Larger industrial units were not interested the same scheme for assisting technical grad-
in production for such a limited market and the uabes to establish small industries.
technologies inv-olv,ed were, for the most iart, hollowing the BISR ‘Gnitiative, laboratory
outside the scope of Gxisting sniallrscale u prototypes of vfarious products needed by the
takings. Thus arose the idea of encour coal-mining industry were developed in the BIT
>ome of the students vvho had worked o workshops and commercial prototypes,of these
projects to set up small industries for the com- were produced in the central facility workshop
mercial production of the items which theyp\had of the new small industry centre. When these
helped to dev.elop. were fouxd satisfactory after field testing, and
.
Coal India Lid (GIL) had agreed to place orders,
Birtu Institute of Sc;ientific Reseakh
the,time came to hand over the products to entre-
%‘hile BIT was capable of carrying out technical preneurs for commercial product-ion. Three
education and developing laboratory‘ proto- ’ mechanical engineering graduates from BIT
types, it was beypond its capabilities and facilities who had been involved in the developments vvere
to take the vsork any further. In particular, since ’ identified as potential entrepreneurs. Howev’er,
larger industries seemed unwilling to place at this stage, a number of ‘obst-acles vvere
orders for products vvibhout first receiving a free encountered.
full-scale sample for trial purposes, there was a First, the entrepreneurs Lvvere mainly recent
need +di” facilities and funds to produce com- graduates from middle or lower/middle clas%s
mercial prototypes. families and had neither experience nor’signifi-
At this stage, the Birla Institute of StiptiFc cant funds behind them. Even given the fact that
Research (BISR) - the unit of the Birla Group’ the government was at that -.timeencouraging the
%
inv,olv,ed with industEia1 research and commer-
.“\
cial R &r D - became interested in the scheme
and recognised the need to create some sort of \A.,
organisational basis to help technical graduates ’ The centres at Allahabad, Jaipur and Bhimtal 31x.,,
establish their ovvn small industries. This idea dihcusxd in Chapter 5.
in
 banks to gi\.e loans to techno-ent-repreneurs’, After several years of discussions, (d-uri@~~
there \\.as a normal requirement for the entrepre- which time more prdjects followed) the BIT’/ ,
neur to contribute about 25Dioof the total capital BISR staff finally persuadyd the Government of ’
investment required to start the business. This Bihar to contribute towards the s’m%ll industry,;;
was 5.omething that most of these young grad- scheme’s0 that these difficulties could be oyer’-
uates did not ha1.e. Remarkably, the BIT staff come. Financial assistance was given.on a,n’ad
managed to deal with thih problem by persuad-, hoc basis during.1975 ind I976?. T’h;is was psed
ing the United Commercial Bank to experiment .,to construct twenfy factory sheds complete bith
Lvith a change in its normal lending practice infrastructur; and to expand the cential work-
and sancrion loans amounting to almost 100% shop facilitie3. The sheds were completeh in
of rhe rota4 capital in\,ebtment invo’lved in each September 1977 and were immediately occubied
business being sponsored. Some of the condi- by BIT graduates being sponsored i,hipugI$the
.
tions under which the Bank agreed to this exper- small industry scheme3. j
iment ltere: that the staff of the scheme would Discussions had continued throughout on
monitor expenses incurred by the entrepregeuis how to get mqre permanent he’lp from the State
and bvould assist the Bank in taking techno- Government for the scheme. At the end of 1975,
economic decisions, that the scheme would pro- following the initiation of the ‘Half a Million
\ ide operational guarantee and q-uality control, Jobs’ programme by Central GovernInent,,J the
and rhar Ihe .stheme would provide sheds and Government of Bihar decided that one of the
central facilities for the use of theentrepreneurs. contribut.ions.it would make under this scheme
The terms of the agreement with the Bank would be the starting of small industry promo-
contribuied to further problems. In particular, tion activities in all technical institutions in the
there ita.4 a problem with the clause stating that State.
those enrrcpreneurs gi\,en sponsorship would Additional funding for five years from March
also be pro\ ided with factory sheds and central 1976 ‘was allocated to the existing BIT/BISR
, t‘al:iliries rhrough the scheme. The need had scheme, while the other technical institut& were
arisen for a ‘nurser\!’ estate on which new entre- d,irected to start their own ccntres. These insti-
prcneurs could locate their units until they were tutes were to be responsible for providing the
financially secure and considered by the Bank to staff for such centres while the Government
bc 3 ‘good risk.’ Unforrunately, neither BIT nor would provide funding for machinery, training
BISK could provide the funds for the construg- a’nd promotion work. Funds were provided for
tion of factory sheds since neither institution can g five year period to the technical colleges in
in\,ol\e itself directly in commercial production Jamshedpur, Patna, ‘Sindri, Bhagalpur and
acti\ ities. Similarly, although BISR was able Muzaffarpur and all were required to follow the
to provide machines and equipment relating to Ranchi pattern and build a ‘nursery’ estate,
the production of comme<cial prototypes and central workshop facilities, quality control secl
orher applied R 6: D Lvork, it could not become lions and an industrial library’.
in\,ol\,ed in pro\ iding large expensive nlachines L .
10 Lvhich the cntreprcneurs might need occa-
sional access during production but which they
could not purchase indi\,idually. Thus, to take ’ This amounted to just under Rs 20 lakhs.”
.. full adl,antage of the banking,agreement and IO ’ It k interesting to note that in the meantime the first
three units to be sponsored through the scheme had
make the small industry scheme fu1l.y .opera-
to be located in part of the Industrial Res&@
tional, funds lvere needed to provide factory
Department worksholj, whilea fourth was located+n .
sheds and .infrastructure on a ‘nursery’ estate the marketing centre on the Bi? campus. !Wer$l
and to equip ( the central workshop with, ‘other entrepreneurs were kept waitlink while thk
machines which could be rented by small entre- ‘nursery’ estate was being completed, but only onA
preneurs to assist lvith commercial production. was seriously inconvenienced.
’ T’hib programme was initiated in the mid-lY7,O’sto,
try to combat the period of severe
. industrial reces- :
’ Techno-er;ltrepren~~r is now a 4ell-used term ‘,in sion. The aim was to create half a million jobs within
India and indicakes that rhc. enrrepreneur is an five years. Central Governmer)t provided funds to _,
engineer or other rcchnically qualitked person. Thih :, State Governments and set out guidelines wi!hin
distinguishes him from a commerci$ entrepreneur which they were to initiate programmes.
without technical qualifications. ’ These other centres are discussed in Chapier 5. i .
; . i
I /’ .M
.,,
h
‘- 12’ .,
./. \ J
’ I’, 0
‘5 !. ..i
;rc ii I , ' tiifla Institute Hindustan
i 'Various national and ,
C t N T R b: -of Technoloa yjZharity Trust *
u'. '. international agencies

Government-of India-
31

.- ~..
Small Inslustries
bt

HII
Division
Sindri +SfndXi
Centre College *- Birla Insfitute
-of Scientific + Birla
Research Group

Y’
I
. .. Government of
Uttar Pradesh .
.
Economic
Research
* t
Division -
. _ (New Delhi)
.
United Commercial
1
r ,
Birla Institute
OfRural 4
Technical Colleges Development
IIT
in West Bengal
Madras. -
.

.
I- .j ..,.I
 c

ii
3
0
-.
.

.J
,’ :.,
+
ing staff are temporary and are paid for directly lizers, dry-type transformers, fluids for intra-
by SIRTDO from government money or from its venous injections and industrial adhesives. Gen- s
own income. At present, government does not erally speaking, they fall into the following
provide funding for permanent staff. categories: material handling and proce.ss:equip- ”
The main administrative/office building and ment industries (6 ynits); metal processing -7
workshops are the property of BISR. Within the industries (10 units); electrical and electronic ’
vvorkshobs, the machinery and equipment used control industries (4 units); electrical power
for fabrication and testing of commercial proto- industries (2 units); chemical and pharmaceuti- .
types remain the property of..&‘lSR, *while the cal industries (6 units); mica-based industries (2
machinery and equipment.%hich is used for units); and civil construction industry (1 unit):.
production purposes remains the property of In total, the units have borrowed Rs 125
the State Government. All SIRTDO-sponsored ‘lakhsj in fixed and ,working capital from the
entrepreneurs *have.,access to this pr&luction- ‘United Commercial Bank. Their total cumula&
related machinery at a nominal rent. Other ti‘veepirnover is about Rs 400 la%+ and there are
industries in the area can also maJte use of this at orders for nearly another Rs 200 lakhs in hand.
a higher rate. The SIRTDO-sponsored entrepre- Between them, they have created full time \
neurs also have access to office facilities such as ., employment for almost 411 people from sur- Ii ‘i
blueprinting, photoprinting, copying and typing rounding villages, most of whom were pre-
at a nominal charge and have free access to the viously unemployed. Most units are profitable,
industrial library and conference/seminar room although, as will be seen, the success of the pro-
\
in the BISR building’. gramme is measured by a great many things
The eighteen factory sheds and related infra- other than profitability. In fact, to think only in - --
structure on the ‘nursery’ estate opposite the terms of-the economics of the small-scale units
main building are the property of the State Cov- would be to miss the whole point of the scheme,
ernment. The SIRTDO administration looks which aims at developing entrepreneurs who are
after collection of rents and maintenance of far-sighted enough to see their efforts as a chal-
the buildings on behalf of the Government. lenge to their technical abilities’and a contribu-
Although there are only 18 SIRTDO-entrepre- tion to the development of the region as well as a .
neurs actually located on the ‘nursery’ estate, , way of making money.
SIRTDO has, in fact, sponsored a total of 32 Financial and technical contributions for’
units of w.hich 29 are still under its direct guid- these activities come from three different
ance. (3 no longer need guidance and have sources. These are BlT/BISR, the Government
mov.ed off on their oven,,.) Of the 11 units which of Bihar and income earned by SIRTDO for
are still under SIRTDO’s wing but not actually doing work for various industries and agencies.
on the ‘nursery’ estate, 1 occupies space in the The BIT/BISR contribution consists mainly
main building, 2 have built their own sheds, 2 of the grant from BISR for the buildings, the
rent priv.ate buildings almost adjacent to the secondment of perm,anent BISR t staff + to . ’
estate, and most of the others are located on the SIRTDO, and the use ‘of BIT land, ‘staff and ~
Tupudana Estate (about 40 km from the main $acili:$es. It also includes a much lesser amount
SlRTDO building) which is a government indus- for the purchase of machinery and equipment. L.,.
trial estate under the management of the Ran- The size of the BIT contribution would be diffi- “-.
f;
chi Industrial Area Development Authority cult to estimate: the BISR contribution up to .
(RIADA). 1980 was.ap‘proximately Rs 20 lakhs.
The entrepreneurs are all engineering grad- To date the State Government contribution
uates from BIT and most had no business expe- has been between Rs 30 lakhs and Rs 40 lakhs, of r’
rience and very little work experiebce before which about 70% has been for the building of
setting up their firms. The small-scale units they factory sheds and development of infrastructure
operate produce a great variety of products on the ‘nursery’ estate. The remaining amount
including mining equipment, transmission has been spent on production-related machinery
clamps, truck componen,ts, steel balls,‘nuts and for the central facility workshop, wages of
* * 1 I ..
bolts, electronic control panels, vq1tag.e stabi-
’i ’ A liit of all the technologies developed for firms is1
. ’
4 given in Annex ?. ?’
’ A list of machinery and equipmenr in SIRTDO is ’ I lakh = 100,000
gin en in Annex 1. Rs 18 = fl 7
.,J, \
 training courst’s.4 In ;he future,‘payment ma)
also be raised from royalties on patents and
from additional work carried out by SlRTDO
on a commercial basis’.

Objectives and methodolog

A-.
Objectives
Neirher the objcctiieb of the Rarachi scheme nor
rhe ways in which rhe sraffcairy out theseobjec-
fives arc easily described on paper. An attempt is
made here to dt%xibe these as clearly as pos-
bible. (Reference is made lvhere appropriate to
reltxanf case studies in Chapter 4 which explain
indi\ idual aspecrs of the scheme in more detail.)
SlRTDO’s o~vn information pamphlet states I
thar rhe main aims of the schcrne are:
IO provide leadership 10 the State eft’orr
for yro\vth of small scale industries through
the conduct of research, de\~eloprnen~ and
related ac[i\,ilie
- to build a IICN class nt‘ creari\,c and rech-
riicall>8 comperenr t2nrrcpreneurs from
cngineeririg Iv rake up rcghriologicall~,
challenging indusrrialitarion
- to ulililc a\ ailable rechnical manpo\vcr and
c\pcrriw from engineering colleges
(1) a\\i\t \mall-scale industries rhrough
wnrr-al technical and information sewices,
tcjIiri2 and quality controls.
Thew require some explanation and espan-
4ic)ti.
As \\c h3\c ~CCIl, rlie sriiall~scale indusrr-J
4chenie orir$riatcd wirh a riwd identified in Ihe
t-qion ftv~~ rype of firm ~\hich did not then txisr
orit‘ L\hich ~oiild achic\ t‘ rhc quality oi‘produc-
Lion ol‘ existing large-scale unill; bur could also
wpc wirh ~rnall ordcr.s, offer conipcti[i\e prices,,
and 3till make a prdfit. Showing rhat such firms
could tw established by careful selection of
prnducrj. by rhc applicarion of manpower and
I‘xiliries alread> ai,ailable in technical institutes,
and \+ir!l the occasional use’ of central facility
tq’uipment \\a~, therefore, ant of the main

I8
 objectives of the scheme. This was seen both as scheme works, ‘because part of the reason it
.a w.ay of increasing the rate of industrialization works so well is its flexibility of approach. At the (
in the Ranchi area and of providing guidance to simplest level, however, there appear to be three
the State effort relating to the growth of small major stages in the develop.ment and promotion
industries. process. These are: the development or pre- ,’
A second objectice was to give a lead to the investment stage; the promotional or ‘nursing’
‘State’s efforts in respect of promotion of stage; ,and finally, the self-reliant entrepreneur
techno-entrepreneurs in a,State where cbmmerce stage.
is not a traditional occupation. The objective
was not just to develop entrepreneurship or to Development or pre-investmen t stage .
. create commercial entrepreneurs who think only. The first- stage involves the identification of the ,
in terms of tuinov.er and profit, but to show that entrepreneur and of the product and the net&- ’
it is possible to have an entrepreneur who sees sary R & D work, training and other assistaric.e
his own firm as part of the whole develop- needed to get both of these to the point where . I’”
ment effort and can make the correct techno- com”mercia1 production can -begin. This stage
economic decisions on this basis. The rewards in involves BIT, BISR and SIRTDO_and ,works
,, - this case come not just in terms of profit but _more smoothly than would otherwise be possible _
from a sense of achievement in having solved a because it is the same group of people (with dif-
technologically difficult problem so as to pro- ferent functions in each institution) who are
duce something which was previously imported; involved thrbugho t.
ha\.ing produced something through the use of The first step is r or the core staff, in their role
technological skill which compares in quality to a’s BIT teachers, to identify potential products
the produce of large-scale.units using expensive and entrepreneurs. Choice of products can
automatic equipment; or having trained pre- occur in a number of ways. In some cases, the
v.iously unemployed and unskilled workers to staff have identified products through contact
produce fairly complicated products so that they with heavy industries in the area’. In other cases,
too acquire a sense of pride in their work. a neighbouring industry or a State government ,,’ _
A third 0bjecriv.e \<as to dev,elop a way of giving agency has approached BIT in respect of pos-
entrepreneurs the.necessary amount ofsupport sible production of certain import substitution (
*. and guidance ii hile at the same time building up items or totally new products!. In’ yet more
their confidence in”their ability to make deci- cases, the entrepreneur himself has identified a
sions and do things for themselves. This ‘is an pro,duct and bFought the idea to the staff for
important issue - the achievsements should be consideration’. In al! cases, a great deal of
se& as those of the individual entrepreneurs thought is put into choosing which products will ’
rather-than those of the organization itself. actuaH for=the basis of SIRTDO-sponsored
It is important that these object.ivfes are clearly firms since this can be one of the major deter-
understood, fo<r other\+% the true point of the minants of the way they hill‘develop.
scheme will be missed. To a large extent, the i Choice of entrepreneur can also occur in dif-
human element has been the important one and fkrent ways although the staff normally choose
it is possibly closer to the point, to speak in terms firom final years students actually working on
of the dev,elopme-n.t and promotion of entrepre- industrial projects or previous students who
neurs, rather than the development and promo- ave had some Work experience. An important 1
tion of enterprisb. Although the ultimate aim actor is that a strict screening process is carried
uas to increase the rate of growth of small-scale ,out
i” by the staff to ensure that only the most
industrialization, this Fas to be done in a way ‘determined applicants are given sponsorshipJ.
vshich benefited th”e region and nation as a whole :i n addiGon, an attempt is always made to match
rather than ju { providing profits for the owners
of the small-s ale indu&ries. Anticipated bene-
1 *
fits included iprovision of jobs through use ’ ’ See Chapter 4, case studies of PlF’and Transgietz.
of labour-intensive technologies; training of : ’ See case studies of Precision Foundry and lnbomi.
unskilled workers so as to raise rural *income 1 j See case studies of Mercuri,um and Ranchi Rolling
levels, and production of high quality’goods. 1 Mill. \
i” It is the core staff in their role as members of the
Merhodology 1 SIRTDO managing committee who grant official
It is difficult to be precise about the way the i, sponsorship to entrepteneurs.
b
\
19” .. c

I *,
 Diagram IV: Activities Involved in the Renchi Small Industry Scheme

INDUSTRIES
Market research. DEVELOPMENT *- Testing end
activities AND stendaxdisation
PROMOTION
SCHSMH

Research and
Development Cell
to carry out
research to
improve quality
and also work on
developing the
import substitutes
Research and

’ P-’

.units.to, develop
and improve the

entrepreneurs
and setting up
enterprises

Jndividual
rPreperation of industrial units to
research-based . be owned and run Product
/
project reports by Young
entrepreneurs
the product to the interest and capabilities of the neur to work for a period of time in a relevant
entrepreneur.: large-or medium-scale factory so as to help him
Having decided on a product and an entre- to work out the technical specifications of his .
preneur, the next step .is:to proceed with~-BFBffuct3:
opment of a laboratory prototype. -I”‘% work Similarly, SIRTDO funds can be used for ,
is- normally done by the students/potential entrepreneurial development. In par-titular, it
entrepreneurs themselves, in conjunction with funds Entrepreneurial Development P&-~
the BIT staff. Following this, the development gramme (EDP) courses which last for 3 months
o@fcommercial prototypes is normally carried and which represent a good starting point for a
out in the SIRTDO central facility workshop by young engineer who has no commercial experi- j
the permanent staff with help from the potential ence4. The courses involve managers from large
entrepreneurs. Usually, :it is only after these industries, busine.ss lawyers, bank managers, tax
commercial prototypes .h,ave been successfully specialists, goG+rnment~officels, small entrepre-
field tested, and orders ‘for the product have neurs &rd other people who actually deal on a
been placed, that SIRTDO agrees to let the day-to-day. basis with the pr’oblems of small- .-
potential entrepreneurs start ,commercial scale business1 This practical approach is ,far *Y
production. more appropriate in terms of helping an engi- b
The core staff, in their role as members of the neering graduate to set up and run a business
SIRTDO managing committee, are able to sanc- than the approach adopted by some of the other *
tion the use of SIRTDO funds to assist with the promotional agencies such as the Small Industry
process of technology development if this proves Service Institutes, which ofganise purely theo- _
necessary. For example, SIRTDO can provide retical courses involving lectures by professional
any funds needed to cover stipends and material teachers.
costs incurred while completing R & D work in It should be obvious from the above that the *
the BIT workshops I. In addition, in those cases pre-investment stage in the SIRTDO scheme is’
w.here BIT/‘BISR facilities are inadequate,’ to.tally different from that typical of other pro-
SIRTDO can”pay for any necessary laboratory motional schemes which involve and rely on a, j
or ,,commercial prototype or process develop- whole range of widely dispersed anda largely
ment to be carried out by outside agencies’:. uncoordinated <agencies such as the District c *..
SIRTDO can also pay for a potential entrept-e- Industry Centre!, the Nati,or&l Laboratorlies.and 2 j. _ .’
c ,. 1,
7 “6 the hational Researfh and r: Development, ,‘,
Cbr:
.*“. L ,;‘., 1i *
poration’. 1 I P
$
2, .
$ .'
1
To explain this stage ,of the SIRTDQ scheme “”
I If the R S: D \+ork i\ particukkly complicated; it
more cl,early, let us look .at a hypo,ihetical.B~T : .:> A
ma) rake a long time and final year studen!s ma>
graduate before the work is finished. If they need
student who is working on an industrial project ’ -.
financial support IO continue with rhe work after during his final year. This v+fork is being done
under the supervision of his professor, who is .:I,
graduation. SIRTDO can pal’ a small stypend. (SW
iase \tudies on Transgierl and l’aedk.lric I.abora- -also a member of the managing committee of.. .
lories). SIRTDO may also pa!’ for any esces5iw SIRTDO. He finds the R 6: D work stimulating ..?
material costs in\ol\ed (see case study on Paediatrk and knows from sur\seys +ur,ied out by BIT’s 4
Lab,), although ir prefers IO per funds from other Industrial Research Department that there
sources such as the large firm which will benefit”from would be a good market for the product from a ’ ,
the new technology (see case stud>. on Transgietz), or
nearby large industry.
rhe Directorate of Technology Development (see
He approaches his professor about the p’ossi- . .
page 6). .
’ For example, in the case of met l-processing indus-
bility of receiv,ing SIRTDO sponsorship so that
tries, since HIT has no merallu 4$y department, the he can set up a small industry on the basis of this
assistance of orgariisations such as the National product. Hax’ing taught the student2 for over ’
lnstlrute of Foundry Forge Technology at Ranchi three years., his professor knows his abilitiesand
m
and rhe Narional ~lerallur~ical Laboratory at Jam-
i
shedpur has been utilized (see page 29 on metal pro- 1 For an example of this, see page 52 (Micage).
cessing industries). Similarly, since the facilities for -I The Cio\ernment of,lndia gives SlRT&Qth.q-mogq be
de\elopifg pilot plants for the production ofcertain to run these courses (.approsimat$ly Rs I lakh per
pharma?etiticals do nor eist, this work has been course).
carried out at the Narional Lahoralory in Luchnw ’ See Chapter 2 for ane;planarion of the roles of these
<
({cc page 37 UII Jayno ~‘h~rrno-(‘hemical~), ascnciea. L a

21 ’\ .- .
/
 .

t _
.
‘,

character quite well and after careful thought; a gu%rantee. Without .&is agreement, most of
and discussions with ’ other -members. ofi- the entrepreneurs wodd have been financially
SIRTDO’s managing committee, sponsorship is’ incapable of ever sect&g a loan to start up their
granted. own business. The only strings attached’to this
The student continues working oh the devel- deal as far as they are concerned are that they
opment of a laboratory prototype but before the, must stay on (or near) the ‘nursery’ estate until
work is completed, he finishes his course at BILT. their term loan islrepaid and that all cheques they
At this stage, SIRTDO provides him with a sign must be codntersigned by one of the mem-
stipend and he continues the work as a research bers of the SIRTDO managing committee2.
assistant under his es-professor’s supervision. Having acquired a loan, the entrepreneur is\
After a few months, the laboratory protot-+pe is then given assistance with setting up and starting
completed and the student is then sent to the to run a commeJcia1 production unit. In this
SIRTDO vvorkshop where a commercial proto- respect, the SIRTDO staff will help the entre-
type is dev*eloped with the help of the SIRTDO preneur to choose appropriate commercial
staff. machinery or to designhis own and to install this
f M:hen the commercial prototype is complete, ina’shed on the ‘nursery’ estate. They also help
SIRTDO arranges for it to be field tested. In $e him to find his way through the maze of rules
meantime, the student participates in an Entre- and regulations which relate to registering the
preneurial Dev,elopment ,, Programme course firm with the DIC as a small-scale unit and
funded by SIRTDO. Once field tests have b&n applying for all the various government incen-
successfully completed, and orders for the pro- tives to which such units are entitled. This is
duct placed, the student is ready to proceed to mainly a catalytic role to ensure that the entre-
the next stage and start commercial production preneurs are able to make full use of existing
on the SIRTDO ‘nursery’ estate. government’ assistance measures. Established
SIRTDO entrepreneurs who have already been
{rotnoriona! or ‘nursing.’ stage _I through all the procedures provide invaluable
The second stage in the scheme involves the guidance to the new entrepreneurs in this
(:
_I ‘nursing of new units on the ‘nursery’ estate respect.
(and,elsevvhereF: a prdeess which is,deemed to be The new entrepreneur may also need help ih
i complete once the-entrepreneur can run his own acquiring markets. Many pofential cust$mers
F b&mess with&t ‘relying on SIRTDOadvice and want to hold techni.c$t,Uiscussi~s about pro- ,
: support.. During”this stage, moral, support and ducts and processes before placing orders ‘and;
,s&ious types of ,finaqcial, te,chnical and com- in these cases, SIRTDO staI?f wi 1accompany the
mercial assistance are given. The entrepreneur is entrepreneur when he goes to bi$ ,for a c.ontract.
also helped to make efficient use of existing This service is normally only reqmred when first
gov.ernment schemes which offer assistance to seeking a market for a new product. At a more
all small indust/ies in the State. indirect level, SIRTDO ent,&reneurs are. also
,L’
,l,
The first and most important step .is to assist ,/ _.
the entrepreneur to secure financing. Help is /’
. given in drawing ‘up a comprehensive project ,//”
proposal for submission to the Bank’. Of more 2 The terms of the nking agreement were described
importance, however, is the special agreement earlier (see pag f i3). In practical terms, this agree-
which was reached with the United Commercial ment means d at once SIRTDO has given sponsor-
ship to an entr epreneur, he fg assured ofgettinga
-. Bank and which dispenses with the need for a
bank loan to start a unit. The Bank accepts the ’
SIRTDO entrepreneur to put up 25% of the
SIRTDO managing committee’s assessment that the
total capital requirement or suitable Gollateral as unit will be technically and economically viable and
it also waives normal requirements for colla&raI-for.
’ The entrepreneur does not have to pay the SIRTDO units under SIRTbO’s technical .and managerial
staff for assistance given in this respect. By comp,ari- -guidance. Bycomparison, as was seen ih Chapter 2,
son, other entrepreneurs can apply for such assis-’ a project proposal which is forwarded to a bank
tance from a financial consultancy company through the DIC is often turned down by the Bank’s
through the DlC,‘but they must pay for this service technical. assessment committee. Even if it is
first (Zvo of the total budget of the project) and can accepted, an. entrepreneur going through this chan-
only reclaim 75Fo of this back, mostly after produc- nel must still be able’ to put forward subs~tantial
I
tton has commenced. collateral. . ,

* 22; .
helped by therlose relationship between BIT and Self-reliant entrepreneur stage
heavy industry in the area. Because of its high In the third -stage of the scheme, the entrepre-
technical standing, BIT is often approached neur is expected to move out on his own3. At
directly by private and public enterprises which this point, it is expected that he will be able to
are looking for small-scale induStr;ies to make take the correct financial and technical decisions
certain products’. by himself; that%e Will have built up his. own
Following this, full post-iivestment servicis contacts with government and business so that
are a\,ailabie to all SIRTDO entrepreneurs when he no longer needs to use the organization’s
the), are needed. These?an relate to new pro- name to get’ things done; and that ‘he will be
ducts, new designs, estension of credit, finding financially independent in the sense that he will
new markets and general issues relating to be able to secure further loans by himself or h%ye
expansion or diversification. As has already sufficient resources of his own to cope with$‘ny’
been mentioned, the central workshop and other needed investment. Central facility services can,
facilities in the main building are available at a of course, still be used by the ‘mature’ unit, bud.
nominal charge, as aI”e+the testing facilities and rates are the saye as those charged for any out-
other equipment in the BIT laboratories. Tech- side industry: ,’
nical advice i&also available from within -BIT, The one way in which‘ the staff feel it is impor-
or if the requirefl expertise is not available in- tant to keep in touch is at the level of attitude . ’
house, SIRTDO pays for an outside institute br formation and confidence building. This they
consultant IO provide the required help. Last, feel is a far longer process than that involved in
but not least, the time of the scheme’s perma- making an entrepreneur financially,-commer-
nen[ staff is always at the disposal of the entre- cially and technically seif-sufficient. In par$c-
preneurs and adl,ice and support is freely and ular, in a society which normally only measures
constantly given by the BIT members of the , successful entrepr,eneurship -in telins of pro-
m’gnaging committee21 fits, they feel that there i’s a continuing need to
Again, the services available to a SIRTDO let their ex-entrepreneurs know that someone
entrepreneur during this stage differ from those also recognises technical excellence and good
a\,ailable IO other small entrepreneurs. In partic- working relations as major achievements in ’
ular, SiRTDO entrepreneurs receive inore direct themselves., ’ i
assistance with ielection or design of machinery
and i++th acquisitibn of markets; of perhaps
more’;mportance is the fact thdt they hai? imme-
dia’te access to technical advice ,if techndlogical
adqptation or product diversification becomes
necessary; immediate access to testing facilities
to help with quality control; and constaht access
to a central facility workshop with a highly
qualified staff. They also benefil from the fact
that the SIRTDO staff are doing their utmost to
support the small industries being sponsored
through the scheme.

’ See for example Case Study on Precision Foundry

and Case Study on Inbomi. By comparison market-
ing assistance available lo ordinary entrepreneurs
regisrered,with the DIC consists mainly of the DIC
marketing manager helpirig to secure orders for
them in government and public enterprise tenders.
The SIRTDO entrepreneurs (since they are regis-
tered with the DIG) can also of course make use of
this ser\,ice.
’ Quite literally - t h e members of the managing coni-
4

mittee seem to be on 24 hour call. Office hours mean ’ As mentioned earlier, on!y &ee entrepreneurs have
nothing. Entrepreneurs have constant problems and actually moved out on theii own, but another eight ’
expect to be able to talk these over when they arise. or ten are expected to leave in 1981.

23
‘-.__
‘.._ -
 I .- tion, the BIT engineers were encouraged to find
1
that not only the r’eciprocating coal feeders but
also every other sub-system within the total
system could be clearly identified and that each
4 CASE STUDIES / held good possibiliries for production within the
limitations of the small-scale industry sector. it
was thus decided that coal handling would be a
Each of the following case studies is divided into good. area in which to concentrate technology
three parts. The first part gives a background development and the promotion of small busi-
ivhich relates the product(s) to the economic ness units.
situation in India in general, and the Ranchi area The first ste; was to develop an acceptable
in particular, and describes the role which BIT/ reciprocal coal feeder. The BIT ’ engineers
SJRTDO played in developing the particular adapted the existing technology and improved
technology appropriate to the manufacture of on the existing design so that a) it became feasi-
these products on a small-scale basis. The ble to prod,uce it on a small scale, and b) the cost,
second part looks at the various experiences and of each unit could be considerably reduced. A,
problems which individual entrepreneurs spon- laboratory prototype was made, a production
sored by SIRTDO:have encountered in develop- prototype successfully field tested by GIL, and
ing businesses based on these technologies and at the technology was given to one of the BIT
the role that the organization has played in pro- students ~$0 had been involved with this project
moting them. The third part briefly analys,es the from its inception. In 1972, he started commer-
case study and tries to bring out the major points cial “production*lin premises made available
of importance. within the Department of Industrial Research.
Although they are fascinating in their own Since the price quoted by this entrepreneur was
right, it \vas not the purpose of this investigation only Rs 17,500 as obposed to Rs 39,000 and
to go into details about the technologies devel- more for each imported reciprocal coal feeder,
oped for the entrepreneurs, or the economics of he was given an order for twelve urilits and this
the small scale firms. These are, of course, ‘Ivas later followed by much larger orders.
touched upbn briefly throughout the case The second major breakt hrough’came when
srudieb and more techn\cal,details are av,ailabte ‘this fi$st entre@reneur, encouraged”by his initial’
in .4nn’es 4, Lvhile some economic analysis i9 success, inves&at’ed the possible -market,, fof
given in C‘hapter 5. For the main part, however, orhe<Jproducts in the coal-ha;idling system and-
the case studies aim to gii,e:a general indication came to BIT vGith#a project for mannfacturing a,
of the nature of the SlRTDO entrepreneurs and picking conveyor on a small-scale basis.‘Two
their units, and to clarify, the way in Lvhich the large firms had put in tenders,to supply these to
SIRTDO model works. An e\,aluation of the CIL, but the entrepreneur felt that if the BIT
m&el. based on the esperirnces described in laboratory could again modI’fy the. existing’
thtije c;t\c studies, forms the basih of Chapter 5. design for small-scale manufacture and reduce
the cost of production, then”he would have a
Material-handling and fabrication industries very good chance of competing. This second
, venture also proved successful and, after field
Background
trials of the commercial prototype, the entre-
After nationalisation’ in 1969, Coal India Ltd
preneur won an initial order for several units at
(GIL) began to intensify the mechanisation of
Rs 85,000 each. His large&ale competitors were
production. The first process to be m&hanised quoting Rs 1.8 lakhs perlunit.
\+‘a5 that of coal handling, ivith a complete The next project to be/tackled by BIT was that
system being introduced consisting of recipro- of pneumatic control of mine-car axle brakes.
cating coal feeders, con\.eydrs, bunkers, C‘IL; was currently using controls with electric
thrower.\-, screens and cl-uphers. These systems motors but was dissatisfied with rhis system
Lvere either imported from Russia or produced because of the danger of short-circuiting and
~~~~~byrransnational corporationKlocated in India. electrical sparking in the presence of coal dust
Gil en the large dfmand for-reciprocating coal and methane gas. Foreign pneumatic centrally,-
feeders, CIL cve’to BIT,90 ask if it would be controlled systems were *<ailable but these were
- possible to design and produce a model locally to very expensive and not ‘totally suited to Indian
sub~r~irute for the imported ones. On invcstiga- conditionS. Consequently, ClL asked BlT ,‘.’if it
. ..‘>
3
 i

Perfec-t innoklators and fabricators (PI F) Equipment was purchased from the Punjab:
hlr Shahi, the o\vncr of P,IF, comes from a farm- and production of the-chain creeper com-
ing family in Uttar Pradesh. After gradation menced. Unfortunat,ely, du$tq,G change in com-
from BlT in production engineering in 1970; he pa8y policy, GIL decided that it‘ would not in
stayed on as a lecturer until 1973. During this fact be using chain creepers and although this
time, he \vas ).ery much in\ol\.ed with the work first one was purchased,it was never used,. and no
of the Industrial Research department and with more orders were placed for this product.
the relalrd small industry activities. At this early Payments for the chain creeper were coming
srage, \vork \vas still being done on identifying in throughout 1974/75, but Mr Shahi obviously
\peciiic products which could be produced by had to try to identify other items he could pro-
small ttxhno-entrepreneurs. hlr Shahi’s involve- duce so that h,e could at Jeast continue to pay his ’
ment \\ith the pnenunmatic controls for mine-car eight.workers and cover his other overheads. Hei_
axle brakes has already been mentioned, but his was reluctant to do any more product develop-’
firm did not in fact become registered until a ment work at this time, sd: the easiest product to
little latera\ hen ivork on the prototype of a chain make seemed to ,be coal tubs. Production of
creeper \{‘a5completed. hlr Shahi won the order these started in 1975 and the firm’; financial
for producrion of one of these for C-IQ by being position .started to improve wifh turnover
able to offer an iten! of adequate quality at a increasing from 3.1 lakhs in.1975 to 6.9 lakhs in
price of R4 Z.99 lakhs as oppo.vd to the Rs 1976. This good fortune, which resulted in Mr
13.00 lahhs being quoted by Voltz5, his nearest Shahi being able to pay off his terfn loan and buy
contender. his first car, was largely brought about by ClL
Thi$ amaring diffcrencc in price needs some pushing orders to this firm as a result of the good
e\planarion. The mosr ob\,ious point is that the will created by the chain creeper episode’.
price being quo~cd w&s kept deliberately IOM.on Unfortunately, at the end of 1976 orders for
BIT BISR’j ad! ice 30 as to encourage the inter- coal tubs also stopped when CIL decided to try
e\l of other public enterfirises and Government to increase the profitability of its repair work-:
Departments, Ek,en \+.ith this low price howei.er, shops in certain coalfields by including coaltub
\lr Shahi still had a 10”‘o profit margin. Z.he’lo\+ manufacture as one of their areas of respon-
CW~ mu41 be largely ariributed [!.o t’he desigii sihility,
.. ,_ With a comp&+z.h&.in-4he denla’nd-#&
t‘acr’or and alw to the fact that no “cos,t was his one ijq% of production, Mr.Shahi resorted to r
incluiied for the large amount of R &*D ‘wwk dtructural fabrication work. It tias at this time
that 1+&t into thij product. In particuflar, BIT/ that the sheds on the SI RTQO &taje*‘vere being
BISR jtat‘t‘ and the entrepreneur had s,rjent six built s’o’fortun8tely he was able to secure some
months mo\ing around the mines inspecting ivork making roof trusses. Although this and
imported equipment, identifying rhe brst pqints other odd jobs brought in suff’cient income to
ot‘ each make and reverltually combining the pay his workers, turno\pc$for 977 dropped to
result5 of the researdh intda new desi’gn. KS I .46 lakhs and hc was l&-y ’ nsious to find a
\\‘irh the proniisc ot‘ a large order, Mr :Shahi permanent and profitable ;line ci f production.
had no problem in securing a loan from the
Bank. A term loan 01‘ Rs 33,000 al I loi0 intcr- (Q .
est wa$ sanctioned which co\,ered 1OW’oof the
cost of the machinery and equipment outlined ’ All banking terms and procedures referred IO
throughout the qa;asestudiestare described in Annei
in the project proposal. A cash credit limit of
\’ .
KS 2 lakhs was also sanctioned. The loan was
2 hlany of chc enrrepreneirs have bought their
processed in a record time of 15 days. This was machines from the Punjab where a combination of
partly due to the CIL order, but also partly due low o\,crheads, ION labour costs, and high turnover
to the fact that the Go\,ernment was at this time combine’to make prices very low indeed. Punjabi
encouraging the banks to give loans to small- machines are often less reliable but simple techno-
scale entrepreneurs. Government ‘seed’ money logical modifications are often found to improve
Lvas not received until f976 and this amount of reliability. tiowever, accuracy and stability (toler-
ance) are not n&h improved and most of the
Rs 10,000 was used as working capital rather
Punjab machines cannot be used for close tolerance
than to buy machinery. The term loan was L_
jobs.
repaid in 1976 and the ‘seed’ money Lvas repaid ’ In fact, Cl1 has taken a favourable attitude towards
in 1980.’ SlRTDO in general since this time.

. 26
i i’w
 a

At this time, Star Engineering (the first unit He has also received a developmeut order of
to be sponsored through the scheme) was turn- four vibratory feeders - the first of which is td
ing a\vay orders for reciprocating ‘coal feeders be made by April. This will be made in the .
beiause production facilities were already SIRTDO workshorj by the workshop staff, with ~
stretched to full capacity. This seemed Like the Mr Shahi’s assistance.
ob\,ious item for PIF to turn to since all the Mr Shahi’s troubles seem to be over now that
necessary equipment for production was already he has selected a well-balanced range of produc-
installed. Since there is an un\vritten liw that tion items. He h’as a current labour force of six-
SIRTDO entrepreneurs do not compete with teen’ and he has already obtained financing to
each other, discussions \+ere held Lvith the staff purchase extra machines. Through the District
regarding the potential for the harket to sup- Indtistries Ce’ntre he has secured Rs 50,000 at
port an estra unit producing reciprocating coal 3% interest which is the maximum amotint-that
feeders, It \\ ah decided that this bvould be a small-scale, industry can borrow to purchase
feasible and in 1977, PIF made a commercial new machines. To this he is adding Rs 14,000 oQ
prototype for field testing. This proved to be his own money. The -new machines, unlike the
satisfactory and an order for sei’en unit-s was earlier ones, will be coming from a well-known
placed with the firm, but it was indicated that no manufacturer rather than from the Punjab. The ,
further orders t+.ould be placed until these had earlier; machines. have caused a lot of trouble
been used for some time and pro\,ed to be satis- through breakdowns and although Mt Shahi-
f;k’tor\.. This sort of experience, gi\,en the firm’s believes, he has reduced his problems in this
past record ot‘ good qualit>, and reliability kvith respect as far as possible by substituting better
the bame customer. is an indication of the time trained and bet!er paid workers for more
a!ld effort it takes for a small unit to build up a sophisticated machinery, he now prefers to buy
s,ood reput.afion. Pa>.ments for the sei’en feeders more espensii/e eqyi/pment since he can afford to
and for some structural fabrication work helped make this choice. . ,
to raise turno\ei to Rs 4.8 lakhs in 1978. Space itself is a problem for this firm and it is
In 1979. tlhe firni \vas again in need of net+’ \‘ery obviously outgrowing its present ‘nursery’ -
products. No new orders for reciprocating coal shed. Mr Shahi has in fact recently bought his
feeder, I+rrrz~oming in because comment on the obvn land close by and gill lie,nlovin’g into his I
Helen units under trialowas still aivaited. In an) own f’actory \here once’all the appropriate infra- .,
case, .IIr Shahi felt it \+as univise to commit him- structuie is installed’. ;’ I * . ‘II c.
”;
self again to the production of only 6ne item. Mr Shah;, as on/e-of th6,firSt enrrepreheur.$ to A !
Throughout 1979 thgrefore, de\.elopment work be sponsorid through the siheme, feels that fhe , I
\\as carried out on several ne\+ item5 includ- d
ing belt conveyors, ripplers and shure gates. ,.< i
Although the central workshop facilities lverc i ’
used in helpink to deiclop thehe products, Mr ’ I‘he lubour I’urcc con.si5t.s c~f’thc follfi\ving: One fure-
//
Shahi did most 01‘ the design worh hitpselt‘ ls.ith man who ha5 a diploma in engintkring - hlr Shahi ,I
orit>, occasional reference to BIT cn$neers. explain the drawir1g.s II) him and he explain> thcm.to
For the year 1980-81, there are orders for all the rest of t hk workers. He is paid Rh 600 per mont d .
the ptoducts PIF manufactures - both old and Five skilled workers who receive belween Rs 250-300
per month: and nine unskilled workers who receive
nebv. These include forty ieciprocatihg coal
between Rs 175-250 pWmonth. One male clerical
feeders (orders are pouring in following the
Lvorker is being trained and is receiving Rs 150 per
release of a fa\,ourable test report); coal tubs for -month. &t the moment, however, hlr Shahi is still
coalfields w.hich are not producing their oh,n; doing all his dwn typing and paperwo+. He has
se\‘en b$ute”gates;‘a Rs 1 lakh order for ‘a belt r-ecently added one engineer to work on*sign and
conk’eyor; an$ one high capacity feeder. Mr quality control. This is the first engineer to be
Shahi’s confidbnce in his ability to produce good appointed by a SIRTDO entrepreneur. HS will be
paid Rs 1,000 pe,r month. .
quality work f%) GIL has ‘Increased to such an
Three ottier SLRTDO entrepreneurs have bouiht
extent that he has also just accepted from them
land at the same place. Bdth the District Industries
ai turnkey jbb kon$isting of reciprocating coal
Centre and SIRTDO are doing what they can to ‘I
fied&-s and a control-panel. This ,orde; (which hasten the installation of infrastructure so that all
I
lvill bring in two or thr.ee otherSIRtD0 units on these entrepreneurs can /move off the ‘nursery’
a sub-contiacting basib) is worth Rs 12.75 lakhs.
i; :
.
> , ‘i L I

financial and commer<ial guidance gi\,en to the orders have bqen undertaken due to the entre-- ‘.
enrrepreneu’rs \\ ho starred at a later date was preneur’s cortadence in himself to get the work
much better than he received. For instance, she done lvith his &vn (and SlRTDO’s) facilities and
feels that he should ha\,e applied for a larger through skillfu!ly managing the sub-contracting
I term loan and chosen better equipmenr but there of parts of the work to othersmall-scale and tiny i
Mas no-one to pi\e proper guidance in this units.
matter. He points put, howei.er, that lvithout the . A
.-
organizariori’s help he would not ha\,e secured a’ Metal-processing i.ndustries
I
loan at alI since & had no funds or coll’ateral of Backgruund
I,, his o N n . As was seen in the ‘pre”vious case stCtd;, work in
He feel5 that the organization’s help was also l

the mechanical engineering field starttid with ;

1, necesiar>’ in respect of helping to design his firs%r products which could be made ?rr?-mill-scale
!, products. Since then he has done most of his fabrication units. At a -later“date, BIT staff’.. -
: <~\in &,ign \\orh although he still consults BlT identified a high demand for a large number
/I ~rat‘t‘once in a N hile if he has problems. He feels - of mechanical items relating to Ihe metal-
I that rhs firms ba4ed on electronic industries are processing industry! rather thari the fabrication
\ more ad\ antaged in respect of the people the) industry, but’whichifould also be manufactured
‘c‘an consutr tkan are the machinery-based firms. on a small-scale basis .after modifications in
The organirarion’s n~arne \+.as in\,aluable in existing technology.
ipuilding up.a-marker until his firm acquired a First esperience Lvith the metal-processing
flamc‘of it\ CJ\\~. The central ~~,or~shop.facilities industries was disappoiriting, for reasons which
&re 31~ \ er! much needed. For example, all the had nothing to do with the Technology or the
b ~actt~n~ng on P1 F’Y t‘jrj[ con\ eyor be11ivas done producf’. Following a request from a local elec-
there bc:au~ the t‘irrii’s own workforce \+as not tricity plant, a project had been- initiated which
a
ual~t‘id and deli\ er> had to be made \+,ithin IM’O aimed at developing a simple casting process-
r$nnihi. .Asain . \Ir Shahi will need the \vork- for electrical motor housing. A la.boiatof’y,pro-
t’o augment hi5 gwn machine !o,type \vas ma<:, Fnd a commercial prototype
‘the turnke!, job for Coal was successfully I&Id-tesied. One of ‘the sfu- ,
dents who had, worked as!4 project assis.tant 90 8
developing the process was ideniified as being , F
a suitable e?treprefieuF- td’!‘stait ,bommercial;‘,;
production, but .the order&never came!
After this init.ial setback, nothing further hap;
pened in this field’until 1978, when the Fihar
State Export Corporation came to’BIT to ask if
it would examine the posiibilities of producing
\ c hccn e\\rntial in w era1 respects. By substi- bracket&-for high voltage transmission towers.
The entrepreneur who had been involved with
.the earlier project on casting processes was
maintaining an espensive lifting brought into the consultations regarding this
request. He n9w took the initiative for drawing
up the design for-a die which (after receiving .
advice from BIT/BISR, on the points which
&tided extra care if good quality was to &ei’
attained) he had made’in’calcutta. The productfl
proved td*be satisfqctbry avd production corni ‘.
bkp’n .no need IO build up production c,a’jiacity menced. So great was the demand that two
$ich \sduld be idle for much of the year. Flex- entrepreneurs were able to start units (Precision .
i$lity, topcope Lvirh changing marketing con- Foundry and Praveen Industries) based on this
dttions, has been achieved through being able product. .
‘\d train workers to do new ta$ks on @Ming Other small-scale enterprises based on c&t-
Machines, and considerable marketing espertise ing, or on hot and cold forging, have si’nce been
*has been applied in acquiring customers for each sponsored by SIRTDO. The common link with .%Q’
new product added to the range. Finally, larger all of them h”as been modification in operation
 so as to allow the small-scale unit to get good housing. Mr Mandelia was asked if he would be
quality of production and compete successfully interested and, having registered Precisio5n
lvith large-scale units using expensive automatic Foundry as a casting unit, he worked togkther
machines’., An additional adyantage for the -with the organization’s staff on. producing a
small units is that unlike the large firms, wh,i+ laboratory prototype and then a commercial
,. rely on m_ass produ,ction and huge productlon,
(2 prototype which was successfully field-tested.
ruris to keep dok+fn their costs, they can under: Unfortunately, the order for this product was ‘3
take job Lvork tind’cope ivith small orders. ,never placed by the firm.
It is to be remembered that BIT does not habe ’ During the following two years, Mr Mandelia
a etallurgy department. However, organisa- became involved in the sort of fabrication pro-
ti dr s such as the National Institute of Fo&dry jects which had proved so successful for earliei
Foige Technology at Ranchi, the National entrepreneurs. A market,Mihs found to exist with
>lerallurgical Laborator? %t Jamshedpur, and Coal lndia Ltd for mini-coal-handling plants
the Materials Science Centre at IIT Kharagpur, and after a laboratory model had been perfected
readill assisted the ehtrepreneurs. Thus,, at BIT, Mr Mandelia did extensive work in help-
although the metal-processing industries often ing to develop a satisfactory compercial proto-
had to go wirhour BIT’s direct technical assis- type. Unfortunately he lost the tehder at the last
rance, SIRTDO could assist by paying for out- mb@ent to a large transnational corporation: _j
side technical expertise. A project proposal had A1 ‘y been sub-
Since almost one third of SIRTDO’s units fall mitted to the bank,on the basis oft mini-coal-
in rhe metal-processing category, one should handling project and a loan t ad al&eady been
look at three of them in some depth in order to sanctioned to finance the cornc”- ercial pf-+
ensure adequate coverage of aheir nature and tion of this item by Precision Foundry. Tt& -
problems. Of the three units chosen, one is based Bank had sanctioned Rs 1.2 lakhs term loan, Rs
on casting {Precision Foundry), one .on cold 325,000 working capital and in addition Rs . -1
‘i‘orging (Ylerzurium),. and, one on hot forging’ 16,OpO was obtained at 5% inteiest for the
(Perfect Fo’rgings). i J : ’ purchase of machinery. The State Gov,ernriient ,”
I agr$d to,give Rs‘,l’O,OOO. ‘seed’ money., Someof’ *,‘a ,‘,‘+ “,
t:” -P,~~~Sinn,Foltrrdr,l,,. ,is I ’ ’ $I
0this Koan h#id;alrhaMy be&s@&n,t onlpurChasing* ‘i,,. I
,i >lf &lAndelia, th-2 o&n;; df Precisio’ri Foundry, iI tiachi)nCrybwhen,,the’ aider- for ‘the m~~r$-c4oal-+ s ,’,.’ .;1
“fgkadual,ed i‘roin BIT in 1$X!. IFith ddegrce in *handlihg ‘plant’ fell ttiro,ugh. When- prodtictio’n j ’ ’ :.
I mechanical erlgineeri’rig.,Sirlce his father wa< the ’ did,shart in 1976 therefore, it involved ihe pro-
secretary at BIT, he had been liling bn the duciion of traditional items such as roof trusses ’
<ampus since 1960 and had a good background which could be made using the available equip-
knoltledge of the sriiall industry s&heme. He ment. A small order >for mini-coal-handling
decided, to become an entrepreneur, but at the plants also came in during this year, but there
time of his graduation there lvere no mechanical was ob\.iously a need to find a bermanent and
engineering, p&?jects coming up. Wh’ile keeping profitable line of production.
in touch ,%i th’&-scheme, he took uork in fac- .,The firm’s lucky break came in. 1977. The
2 Y
II tories p<a’E-Ran’chi“to gain some, experience. Bihar State Export Corporation had quoted for
!. IF/’*1973, the first casting pqoject came into a World Bank tender on rural electrification and ,.rr
rx&!ence ivhen a local elec,tricit}’ firm asked BIT one of the firms on whose behalf the Corpora-.
?t Gould look into the possibilities of producing tion bad quoted had fallen down on the grder.
a. simple -casting process for electrical motor Having heard; of the s’mall industri,gs scheme,
>i * some of the qfficials of the Corpor,ation came
v
to.ask if there was an entrepreneur who could .’
! The e??en~ 10 \+hich [he enrrepreneurs have suc- fill the order1 quickly. The-items needed were
ceeded in ach&ing a high quality of product is brackets for high power transmission to?Frs.
Liorthy of mention. One of the uniti producing T.h_eywere to bF?ast in alloy aluminium instead
indwrriat fa.s[egers,. (rllercurium) is the fi,rst smalt- of cast iron’ afi& the’order would only be given if
xale unit in India IO gain the Indian Standards Insti- I

cult’ (61) 5ramp of approiat. Equally impressive is ’ Although as gtrong as thbse made fryn cast iion,
rhar another unit producing atloyxteet batts(Perfecj alto, atuminiulm bracki&s are yuch tighter and there’-
Forgings) \\a5 the firs[ small-xale unit in thecountry for-d place lesslstrain on t)ti tr&missiop towets and
to gsr a l.toyd’\ certificate of quality for irs producr., reduce maintebance espen’diture.
f I

a suitable sample could be made a\,ailable within
three months from an entrepreneur who could
pro\‘e his ability to produce by ha\,irig his o\vn
dies.’
!Ilr Ilandelia I\ as consulted about his possible
interest and although this was a new product
both for the organization and the entrepreneur,
it \+as decided to ac<epr the challenge. Ha\,ing
.~ ~~+~~ked out \virh the staff the things which
needed parritklar att-emi~~~ if a good quality
product \i a, to-be obaiqed;hV%Ia@elia event
l to Calcutta to ha\e the dies rnade. Tfi++z~~,?
rime-consuming process which rook him’aodMi-
Ranayar,ia of Pra\ een Industries (lvho ivorkcd.
~lo~lv \<.irh him and \\a> interested in a 50; 50
share ot‘ rhe potential market) the best part ot
three rllorith~ IO get .the dies actually made. The
sample5 rfiade t’ronl these dies were satisfacror>
and the full order war placed by the Export
Corporation. ! the first tu’o or three years of his firm’s esis-
Before \larting b roduc.li!ln, Jlr IIan
~CJion\ inie 1he Banh 1hat .)I\ itching 10
C‘orporariori bid\ on behalf of firms like Preii-
4iori Foundry and rahey a ‘nqrlieting’ commis-
\ion at‘ !“?I ot‘ the Lalue ofz~~h%rder. For this
commission. the t‘irm i$ al$o certaig of quick
pa>‘menr since the E.kport C’orporation pur-
chases directly t’rom the firm \\ithin fifteen days.
This is a great help since many small industriti
are kept i\airing for months for payment from
their customers. The firm can only market
through l he Esporr:C‘orporarion, but more t ban
enough work seem< to come in through this
30
.
, ’
channel. Turnover in the first year of production ,’
(1978129) tias Rs 2.01 lakhs and this rose to Rs
8.05 lakfis in 1979180. This put’the firm on a
sound financial footing grid 8s 0.35 lakhs of the’
term loan could be paid back,to the Bank.
The firm now employs up’to twenty people’
and has orders to keep it goi;plg at more or less
full capacity until 1981. Mr Mandelia has
purchased some land close by and will even-
tually build his own faFtoJy<-t.$ere. He feels he 6
needs moik time before”&ovir$ because he will
have to be in a strong enotizh firiancial. posi-
tion to absorb the cost$ of moving - both‘ the- _
direct costs and the in ‘irect costs involved in
tu’o monlhs closure. e wants to remain a
SIRTDO entrepreneur i ecause of the advan-
tages involved, .
I Like many other new’ entrepreneurs, Mr
Mandelia%ent through a difficult period during .
1
tence, and he feels that if ihe relevant authorities
hard to obtain more than X@o oi\is reqbire-
merits at the controlled price t’io;li government
stores, and the rest has to be boeht ,011the open
market. Not only are prices higher on the O&XI
market, they ar.e ako liable to infl&io&y rises
which makes it difficult to cope with big order5
bvhich rake *long time to complete. For exam-,
p?k, ivhen dealing with IDA tenders, the prices ‘,
initially quoted cannot be raised later when corn: i
“, *
’ $ome of rhr krorhcrs are casual ‘and..Ihe number
employed ar any one time varies with the workldad.
C . 1 /
-0
1’
j’ :
 ~ L
c b

pleting the order ei’en if rhe prices of raw r+6-;- an enormous help since he has lo have every ‘_
rials 4aL.e risen’. Trying to hedge against ynfla- profiction lot tesled for quality,/lf he could not
tiofand fluctuations in price by stock-piliqg is. have used these facilities, he would have had to
now’ very difficult because the cash credit limit send each lot to Calcutta forteFling. Second, the
\vas settled lvith rhe Bank a[ a tirn<~‘Ghen prices technical backup and expbnsive equ.ipment
were louver and the limit is now too low to allow av?jlable to hirn through. ihe central facility
sufficiently large quantities of law materials lo wprkshop, plus the training he received at BIT,
be bought. heant that he could take, up a fairly sophisti-
Power cuts ha1.e larely been affecting rhe cated product for which there is less general
unit’s ability IO run a( full capacity. vi’ competition,in the sm~all&cale sector. Third, the
Ylandelia has both an oil-fired furnace which scheme was imporlant in securing for him the
0 requires electrical power for operation and a firs1 order wirh the Bihar State Export Corpora,
CoaL-fired furnace, ivtiich can be used when the [ion: it was the scheme”s name which initially
poiver fails. Howe\,eLi he prefers the oil furnace attracted the Corporation’s attention and no{
since it is easier 10 control the temperature‘and ir the name of his particular firm, Fotirth, the
can work non-stop for 7 days without needing personal interest of the staff arid the moral and
any artcnli.on. The coal furpace has to be technical support and advice given during the
3ropped’Pr\ery 24 hours and lakes 4 hours to first three difficult years of production helped to
s1ea.n: &o, because ir i.\ dif%<ult to control the keep him going.
remperalure, rhe rejeclipn rate of brackets is
gretirer, Alrhbugh rh_e coal furnace is much Mercuriutn
cheaper IO run, it resJrs in a much lower rate of Mr Beri, the owner of Met-curium, graduated
piodu~tion (abour 250 units can be produced in from BIT in production engineering in 1970.
* rhe \ame rime raken to product 400 units wirh A’lthough hc wanred 10 start his own business -
the oil-fired furnace) and since time ij imporlanr then, he felt he owed ir to his parents to look for
rhc &l-f‘ired furnace i5 prct‘crred. ‘Tl;r tempcra- ivell-paid, secure employrnenr afrer rhey had
lure’ conrrol aspcc‘l 01’ rhe coal-fit-cd furnace invcsred-so much in his educarion. He joined the -
could be impruLed b>, adding a blower, bur [his Government Irrigation Department, first as a
\+ould asairi mean a rcliancc on clccrrical power. rchearch assislant and then as a sub-regional ;
%r.
The final problem is ivith die\. &lr Mandelia officer in charge of maintenance and repair of
* 1135been bu>.ing die> from Calctltla and has had hca\,y earth-moving equipmenr. After four
‘[o ii;ii[ up 10 6 - 12 monrh\ for det?\,ery. Apart years of this work, hc was more anxious than
from the timing aspect, the quality of steel used ever 10 start his own business and, havihg heard
ha4 been such that rhc dies ha\,e had a limited about rhc de\~elopmen~ of the -small industry
Iil‘c, and rhcrc arc further problems in getting scheme, hc b,isircd BIT LO look into the po.ssi-
then1 rcl.urbi\hccl. Typically, die Iil‘(; is only biliries of receiving sponrjorship to start a small
50,tHM)part\, whcrcaj ordcrt, arc for more Ihan business.
II\ ice [hi\ anlounl. The prof’irabiIiry of this unil Having done a survey of possible items which
i. would bc grcatl\, increased if rhc central facility would be in heavy demand in the area, Mr Beri
work4lop could be equipped \+,iLhadequale die- came up with,four firojects which all seemed
making i‘icilities. This u,ould sa1.e time and fairly promisjng, but he finally decided thai pro-
improle the qualirp of production through duction of b,olts would be mosr prafitable.
ensuring better quality dies. While working on the project proposal, he:
Air slandelia feel5 rhat rhe small industry’ decided that the &$chines for his u it could and +
scheme was important lo the dcvelopmenr of his ih0ul.d be made in India and did ,a t have to be-
firm in’se\eral ways. First, the abiLLy IO utilise imported. He estimate.d.th’at whilk’equipping his
rhe BIT testing facilities at a nominal charge was unir with imported Yhachines would cost about
‘.,?
Rs 20 lakhs, he could design adeq’uate machines
himself (with the help of BIT,siaff) and have
them made 10 his design in ihe “Punjab ‘at one
tenth of the cost. The staff gave their blessing to
this plan and the project proposal was submitted
10 the Bank on the basis of estimates for locally-
made machinery. A term loan of Rs 2.5 lakhs, a ’

32
 \I~~:.ur~ur~l‘~ :riip:, ‘\cXl cll.l\\ -hcllitl 101 icJrrcillrlg clllllllcIL!l (,I rhc t7;11
4 ’ .

I
0 /
\[;ir!t’Li ;~1rlllrl~ 11; t’rom pri\ are Iraderj at rtic The _unit currently emplGys nine full~timr
.i\hlrlg prl;c. I~urrlo~‘cr \~WI up IO K4 4.85 lahhj L{orker5, two o1‘whom a’re suptm.isorVand seven*
ii tliL~ti<0mpart‘cf I cr\ ta\ aurabl~~ 1~irh a turn- \vho are 5kille;i or semi-skilled and Gere train& ,
O\t’l c\t <JIlI\ CJ.SO ILlhh\ Ill IhC pre\ lC>Llj \,ear-. 011 rhc jLh Additi&ll~. up to Ciftccn cgsual ’
Air ticwgl \lr Her I \\;I\ &lblc I~i\llppl~ imll\\\*orhcr\ ;ire cmplc)yc”d ~vhcn rictxlt$. Mr Beri
OI’ ’
@;11111~~~l I tic i;IIllC qll;lIII~ aI50 cmploy~ ;I ~lcs m&iagcr and has t\vo diiar- ”
;I> tlI\ laI-gc-5cale ic>Ill-
pt~ll1k~rhIII pr lie\ about. 2S’J’olo\icr- than rheir4, Acting ;~gcnjs to &xl \\,itli the various go\‘ern- ’
t1c Sllll lcli IhC rlwd tar wn1crt1i11g (0 $Lc’ merit departments and public, enterprises with 9
Ilt’rcurlum’~ name. an ekrra marketing boosr. It ivhich business is conducted.. *’
\\a~ tar rhl\ reason rhar he approached the The main problems still being faced by the
Indian Srandard\ Inrriru!e and asked if they un:i’; are those of raw materials and power. One ri ‘I
noutct 1~41 his product to see it’ ir L\as of high of the problems kvith raiv materials is that only ;I,
about 10% &‘-the firm’s needs for steel is avail-
enough ~1~3111)to reiei\e the IS1 stamp. It rook
able through the government channels at the’
about c)ne >car t‘or alI the tests to be done, but
co_ntrolled price. This is because the quota for
the qualit!, jtandard isa4 finally approved. Fol- gotiment steel is estivated on the basis of the
lo~,lng this, the )ale$ situation improved drama- highest amount al.Iocated to the “firm from the
ticall! \ilth turnover rising to Rj 6.3 lakhh in goi’ernment depot’ direr tlie past ‘three years, i
19’8 79 and again to RS 10.8 lakhr in 1979/‘HO. rat her than on the basis of actual demand. OpeA
The sxpccred turnover for l%OiYl is in excess of marker steel is more expensive and of a poor.er
R\ 70 lahha. This recent upturn in business has qualit),, ivhich affects t.he standard of the p?o-
allo~txl Jlr Beri IO pal back R\ 1 lahh of rhc duct.‘Ad$.itionally, difficulty is often fated in
Icrm ICMI~and he hopt’5 10 hc able to pa! bail\ the finding enough finance to pay for raw materials.
rt’mainlng @j I .5 lakh4 b\l’ the end 01’ 1981. Ll’orking‘capital is often tied up tiecause of:late
,
Is. 34” I
# 1
 payments of bills, and the cash Fredit limit it was at the thermal power statihn that they
restricts the size of orders whjch can be under- identified aa:potential
taken. Mr Beri feels that these constraints are to be usedAor pulv&ising coal
causing him to work at a much lower capacity combustion furiiacP. At<
than would otherwise be pdssible. If no diffi-
culties were,pxperienced in obtaining raw’ mate-
rials, he could probably double his existing
output with hi>eFtsting machinery by w$cng
- ~~~~~-~----
extra shifts. high quality, at 9L reasonable )price and on .a’ i
4 Recedt power cuts have also been a- problepl small-scale batis, they wodd capture a good
and have resulted in Idiver output levels than part of the market. AC this time H,eav$ Elec-
would otherwise have been~possible. Mr Beri trieals Ltd had a huge profit margin -\it was sell- ”
feel9 t hat it would be,,too expensive to purchase a ing the finished pJoduci at Rs ‘7,000 per tonne
generator for his needs. He requires 60 kW and whereas the=raw Material cost o.nly Rs 1,800 per L
the interest he would have to pay on the R$ 3 tonne. This firm no;mally bpught ail the proa 1
’ lakhs needed to buy a generator capable of duce of the small-scale’uniti-in the district and ~ ,_
supplying this amount of power would make his re-sold to the electrical companies at a.profit.
p.Toducu tincompetitive. He .is thinking, how- ,The entrepreneurs took their idea to fh~-’
Aer, of buying a diesel engine which could SIRTDO staff, wlib helped them to draw up:a’.. ’
supply rhe needed powerand which would cost project proposal for submission to She Bank. .’
less than Rs 1 lakh’. Since-so many of the recent, 4Eduates fro~~~~~ -1-
Air Beri feels phat SIRTDO’s main role has EDP course were coming .+p. wM?t prd- :
been in pro\,iding people he can discuss impor- posals for finance at.this time, the sta?f:asked a
a tant business decisions with. In particular, he team ‘to come frdm the Batik to lo&at all of -
feels it was important. to have someone who these’logether. Perfect Forgings was.one of eight ”
could reassure him chat he was’ doing the right unit> which‘ had theiT proposalsS?,ppr,bved with
rhing. Apart from this moral support, Mr Bet-i minor modifications-‘. ‘, .
feels that it has been jmpo&nt to have someone The Bank sanctioned ti loan co’sisting df the
reminding him constantly about keeping up the .t%llowing: term loan Rs 3.4 lak ‘s; cash credit ”
qual,ity of production’. lii’nit Rs”l.9 lakhsaand bill p&h Pse limit Rs 1.2 I8
lakhs. The term. IQan was’re-financed =by the 1,
i
* Pe$ect Forgings Indian DeveloptheQt Bank &-rd so wtiS ;Evailable
Perfect Forgings is a partnership owned by Mr at 11% instead gf ,rhe normal 14%“. The Gov- r
K.B. Singh and hlr A.K. Singh, who both ernmeht of Bihar gave Rs 20,000 ‘seed’ money.
*decided to go in for their own business because Tti date, the firm has managed to
they felt this B,ould be more profitable and more inlerest insja wts but asyet has not
satisfying than paid ?employment. They were of the capital on the.term loan. ’
students together at BIT .- ofie. in pr0duct.iQ.n ‘Havjrig had the !b&sanction_ed by
. engineering and the other in mecfiinical engl- the two entrepret$urs used-+.%ey:‘from the pre- .
neering - and they both participated in the first operative limiit (part of the termloan) io go to.
entrepreneurial development prograrhme run by tki,Punjab to select, ordkr and’ supervise ‘the ,
-.., I
BlTbbetween March and May 1976. The cdurse y\ /
was held during the evenings, and during !he ,
:\ . I ’:
days they spent their time trying to look for a
of steel balls are put into a dr,u,m
suitable ,product which could form the bAssisof. ntinuoysly fed’for pulverisir”lg. It _\
their business. They visited SlSl and RIADA is then blown throu\ Q with air to the combustion
and also several industrial undertakings in the furnace. Good qualily dteel balls areessential, other-
area, iicluding a nearby thermal power station. wise they spl$ter and% pie&s of steel get Fixed with
rke coal and choke thisysteh,

’ For units which require less power, the cdmparative

econ0,mic.s of the generator and the diesel engine’will
change in favour of the generator. Cold forging units+
require more power than any other units sponsored
4
by SIRTDO.
 making of their equipment. As was mentioned
earlier, machinery in the Punjab is amazingly
cheap but it is necessary to actually.go there to
order it and to wait while it is being made. If the
person for whom it is be’ing made is not there
when it is finished, someone immediately comes
along and buys it fqr cash. An additional ,dis-
advantage wirh rhe Punjab equipment is that’
runriing costs are highqr because bf frequent
breakdowns and high- repair costs. Th? low
capital cost was felt to be worth the attendant
_I u
disadvantages. ‘ fluctuations
-The sheds= ti ‘-nursery’ estate were com-
pleted in S,eptember 1976 and, having installed
the equipment, production commenced in early
1977. I+‘ith the help of technical advice from
BIT, good qtiality of product and low cost of
production were ensured through modifications
‘in the hat forging process. -Good quality, plus
the use of the organization’s name, were useful
tools when looking for markets. The entrepre-
neurs found that potential customers they
approached had come to associate the organiza-
tion’s name \vith good quality and reliability and
knew that there was a good techtitcal ‘back-up
a\,ailable through BIT/BlSR which allowed
access to expensive testing eqvipmqnt and highly
qualified technical advice.
The first large tender for which Perfect Forg-
in_es put in a quote came from the nearby ther-.
ma1 po\vyr station in August 1977. At this time,
the price for allo),.steel ivas Rs 2,300 per tonne,
but by the time the contract was actually signed,
the buying price had risen to Rs 2.900 per tonne.
The pobver station refused to consider altering
the price for the finished product which had
been agreed the previous year and informed
F’erfect Forgings that if they insistSed on raising
the price of their goods, they wo6ld receive no
further or&rs. The deal was cbncluded, there-
fore, at the agreed price of Rs 3;350 per tonne
‘for the finished product. Given that 5% of the,
raw material is lost in processing, that fuel costs
are Rs 250 per tonne and adding to tqis tabour
a?d overhead charges, there w&s no pPtifit at all
made on rhiS order of Rs 1.18 lakhs.
At about this time, the Manager of the Divi-
sional Headquarters of the Bank in Patna was
visiting some of the uilits at Ranchi to’ask what
problems they had.“*Perfect Forgings explained
i the problem with the increasing a,nd fluctuating
price of alloy steel T the main raw material.’
(Unlike ordinary steel, this is not produced by
- government and is not subject to controls.)
Beside the problem caused -by cus-tomers refus- .
ing to raise their buying price to compensate for
the rise in the price.,of raw materials’, yhe unit
was $80 facing severe problems-because of-the-
fact that the cash credit limit had b&n fixed at a
time when alloy steel was dnly about ,half the
current price. This meant that the unit was con- -___
-&iitly having to stop and Gr%Zkbecause ’
only sma’ll amounts of raw materials could bed
purchased at any one time. It also meant tha,t the
unit was’ Gnable to stockpile to guard against
in the market price. of alloy steel
while orders were being completed. To try ;to il
help out with this situation; the Manager _ _’,’
decided to give the unit anlad hoc.loan of Rs 1 Y ,’
lakh at 14% interest for a p&i&i of one year.,At I’ .
the end of the year, since the situation had not /’
improved, (in fact the-price of alloy steel had by Ji
then risen to Rs 4,300 per. tonne) the loan .wap I
extended for a longei period of time. . ,/’ a
An addiiional problem of late has been tha /of, .
power cuts. This was partP”c’tilarly bad in A i ust .o
and September 1980 when prod’uctiori was,/ijnly
1’5tqnnes instead of 35 tonnes per montp. The
entrepreneurs have considered buying th,&ir own
generator but decided that it would be corn- ,
pletely uneconomic to do so. A 40 kW generator :g;tb
would be requiked. This would cost@ 2 lakhs ,!p
and would raise p&w& costs to Rs I;65 per unct ,‘e”
as oppdsed to I& 0.55 per unit cuciently being
charg’ed by ihe State Electricity Board, They feel.
that iF SIRTDO purch_ases a 100 kW generatcy;
for the workshop facility and est’ate, this would
help to solve their power problein. I
A further problem is that of very tough corn- ,
petition. from the other sevenSsmall-scale indus-
tries producing the same product in Bihar State.
Whereas the Large Heavy Electrical Compsny
used to sell to buyers at Rs 7,000 per tonne at a
time when raw materials were Rs 1,800 per 0
tonne, competition, between the eight sm@
firms has reduced the final selling .price to F+s
6,000 per tonne at a tinie when the raw material
costs Rs 4,300 per tonne. This means that profit
margins are very Ibw. Attempts to form an
,ggreement on minimum price between all the
.* ‘,
:
\
’ Customers ‘are waidly,. govgrntient agencies which ”
; will only re,cognise that there has been a price rise in ’
i the raw material if the\ producei: of’this ‘Is also a ~
government agency which provid& dticumenr,ed
: proof of this. Alloy stee’l is only producqd in the
private sector, so no acceptable docuinentation can
be supplied. i
\ . *
37
.t
 small firms have failed - there is always under- industry irr~hich’folkowing the staff’s advice to 1
cutting when quoting so as to try and secure a .,be#qr..tali’t&.%nscious rially does. pay off? 1.: ,,..i”
< ., s
*market. _ /’ Both Mercurium and Perfect Forgings have /
. Perfect Forgings has 3 slight advantage over documented ,proof of the high quaky of their .
its competitors since <it-pjas the first small-&ale products yhich - together ‘with ‘lo.v+?dosts due ,*
unit in India to obtainja loyd’s certificate of to adaptations in -technology - has assisted in
,, .,,..,.,,qU~li.tY:fo~.~ttsprodu~~t:“This t t was first carried securing markets’. In the case of Precision Foun-
out when .the Bihar State Elect ‘city Board.said dry, although technological skill: was initially
\
that it would give the unit an order if the Lloyd’s required to achieve the right quaho and-* low ,
certificate was obtained. Since then, all consign- enough cost to get the Export. Corporation eon-
ments for the State Electricity.Board‘have-been tract, the*incentive to go on improvjng quality ’
tested for the Lloyd’s certificate at the Board’s and reduc-mg costs has been muchJess than in the
expense. (The cost is Rs 230 per tonne tested). other two firms. As might *be e?gected, too
Another attempt by sthe firm to maintain -its secu.re a market ,takes away the. constant neces-. -
competitive position has been to replace the oil- sity 10 go on iqnovating. ...
fired furnace with a coal-fired furnace, which All .oe ;&hese .industries are suffering ‘from
has saved an estimated 25% of total fuel costs’. problems$$h rati materials - in term’sof quan- J
“Apart from this, the entrepreneurs’feel there is tity and/&cost. This is as might, be expected
Jirtle they-can do to reduce their cysts per unit >iqce such@%igh proportion of total cost relates
j _.__.
further. to steel and:other metals which are often drltr-
The firm now employs thirty-two people ana cult to acquire and subject to ve\y--high price
is Lvorking three shifts. Turnover has gone up rises in the open market.’ The mos\t‘troub,lesome~ ’
considerably since production started (from i3feature of this is that the cash credit hmits,!‘whi.ch “” ”
,y 6 Rs 4.9 lakhs ~-in 1977/78 to Rs 11.2 lakhs in were based on the value ofihreemonth’s’ work-’
1979/80), but the entrepreneurs consider they ing capital tyo or three years ago, are now only
still haL,e a long way to go before they can call equal to (the value Jof one .months’ working
t hemselL,es successful. By and large, they feel capital or less. This makes it very difficult for t.he ’ ’
that their major problems would be over if their firms to b<@sufficient raw materials to ensure
cash credit limit was enhanced to allow for the continuou&&oductian- runs; and capacity utili- ’ I,
9 fact that the price of alloy steel has risen so sation is ld&?r’than it could be. I’ w_ \;
,.’much. It svouldalso Qeofhe+ if there was some .. I 3 -La.
%
l?iectroniic control induStrl”es ‘i_s_L--- 3
way of producing acceptsble documentation to ,r’
* I 4 d
government purchasers to prove that the raw ‘,fl i;
Background ‘ii
material price/has risen, so that a higher pur-’ Most of the heavy industr@i the Ranchj area
chase price could ‘be given for the finished was built up during theJ950’s and 1960’s and
product.
w s based on imported techno!ugy....dev~lop~ !\,:,: I
‘. d ring the 1950’s; The Industrial Research “....
SUMM-ARY OF CASE D partment of BIT ‘ha4been carrying out sur- .
The technology involved,in this type of industry ve ” ,
which revealed that. many of the machines
is’an important factor in its success, for without - in hese heavy industries wereb&rg%;bught
adapted machinery or processes and good i
to a complete stop by the failure;of b.ne~smaJl~-i -.-~
quality dies it would be impossible to achieve electronic component. ,For .e-xamde, -a high ..
high quaiity and low priqes .&thin the smald-
frequency furnace imp$ortedbythe Heavy Engi- IF
:/” scale sector. With tough ‘competition for pro-
ducts of this type, such small units would have
neering Coiporation (HEC) from Czechoslo-
vakia at a cost of Rs 12 lakhs was. found to be
stood much less chance of surviving”if they’htid lying idle because a capaci&tor, costing only Rs
not developed an advantage in terms of price 20, had failed. An even nioTe seriousexample was
and/or quality. This is an example of an I/that of the breakdown of a iie-boring machine ‘,
i * .I in 1962,ata&stofRs27lakhs ;
at present day prices); this was $
’ To process one tonne af steel balls used to take l-.75
litres of furnace &I tiV50ptr titre at the ’ ilure of the valve based, elec- *“.,
time of sqapping the furnace. The same qmount of rch accou&ed for no more than’
work takes 1 tonne of coal w/-&h posts Rs 220 per’
tonne. p \ Since delays Lwere’
_:’ . ., .f*. .-
_.-._-~-
//
- . . ,js
38
/’ ‘.c .:i .’
*- :
*. , :
 obtaining spare ,parts, large and -.exeensive -which determine-the quality and thus therelia- ~
bi]ity of an’ e]ectr~nic circuit, Tie f~~~‘~~~~~~~‘~~.‘I“~.‘I11.
~.‘L.I
machines were often lying idle for a con&et-able
time. This was obviously a matter of some con- the quality of the components,fsuch as’ transis- y
cern to HEC and other affected industries, but tors and resistors. These are all/ mass-produced.
the BIT staff, warned that the situation could by Iarge firms and so,a quality-a$sured supply of
become,,a$$at deal more serious since it was these is available to all.,assemblk firms whether
*ylya’matterof time before the electronics tech- they be’ large-scale or small-scal$..The second is
nology being used became completely obsolete. the diligence required in ass&nbly...of -these. ...._......-:
BIT suggested that it would be worthwhile consi- components on the printed circuit board: A .’
dering the possibility of replacinihe existing badly-assembled board will present constant
circuits with solid state technology. Despite the problems. The ,thi-rd item,is the printed circuit
warnings and suggestions, it took a specific inci- board itself,.- These boards are made by both
dent to prove this prediction befo e anything large-sc,ale,and small-scale units, but while the,
;.
happened. ’ 1 former fiavk been able to achieve a high’standard
In 1971; a valve failed’in the electronics circuit of; iquality :vthrnyg$ the use of photo-etching
in one of the HEC’smachines, and replacements eqG$%ent, the latter, unable to-afford thishigh-
were no longer available. At this point, HEC cost technology, have only been able to produce -....__
asked BIT to investigate the possibility of devel- a much inferior printed circuit board based on, ..’
oping a solid state circuit -asa replZ@ment for hand-drawni’designs. This soIt of card is (just) d
the old system. This was done and, having made acceptable in entertainment electronics but not
the initial breakthrough, it was realised that for, use in industrial electronics.
many small-scale industries could be developed By ‘having access to the photo-etching equip-
-_.uti4tilisigthe skills of recently qualified engineers ment in the SIRTDO central workshop (some1 -
who could study existing circuits ,and replace thing which they could not other,,wise havehad), ‘----<
them with’ new types of circuit before they the entrepreneurs be.ing spons&ed. by”SIRTD0 ‘, ,
became obsolete. This, then, was the’basis for could fill an important ‘gap in the..market, ,-’
identifying suitabIe students who could be namely, responding to small orders with high ’
assisted IO start small-scale businesses in the quality products. This, plus the R & D back-up
field of industrial electronics. ’ in the BIT laboratories, has been ViEally impor-
Of all the fields covered, this isthe one which tant in allogingY$is group of entrepreneurs to -
requires the greatest R r& D ihput, by BIT staff survive by allowing them an enormous degree of F
in developinglaboratory protolypes+-,:It,, is esti- flexibility. , ‘I
mated that. almost ten times as mu?h time is Of the four entrepreneurs involved, one con-
spenr on R & D in electronics as all the other centrates on control panel: for mining ec$i$
fields put together. There is a simple reason for another started with supplying
this. Every product or application demands a substitutes for imported
different detailing of the electronics circuit and as temperature moni-
in many cases only a>few circuits of a particular on to making con-: ’
type will be needed. Thus, not only is agreat deal,:’ schemes (India :I
of time put into developing each new circuit off by lookingat.. ,.,,.>>A
(because there is a great deal of trial and error but went on&o study!and ..+”
inuolvbd), there is also a constant need to design of products based on th;e~F.~;.~‘~: .,~-
more ew circuits in order to stay in business. same technology (M$ditron); and the fourth i.. 7,
Altho gh some of hhe entrepreneurs in this:field entrepreneur(PCB House) producesprintecl:cij-. ‘:$-, -J
F : ~j-
are begoming less dependent on the R’;&D.facil- cuit boards which are used by t& other three’ 2:e-3,-\.
ities available in BIT, it is unlikely%tat they SIRTDO units and by outside firms,... .;‘:..YI, c:,
could ever have succeeded in keeping thokir enter- All but the last entrepreneur are. doing ‘$Fi
-prises afloat without’continued access to these :extremely good business. &is trouble is that the . . ‘:
facilities. work generated by th?e three”neighb.ouring units , --*T
The other important factor in. helping the is nowhere near &fficient for him to-operate at
entrepreneurs ta/‘femain competittve has been full capacity and he has trouble getting .orders ‘.;s;,
the constant avail&iliry of high quality printed from companies in Calcutta.a&d elsewhere since !y,-::
:,<$,I .!”
circuit boards designed ~0 meet their needs as they would rather purchase. from a nearer “. ,,y
their products vary.“This needs some explana- supplier. As a consequence, his yearly turnover 1,’
tion. Basically, there are onlyJ three factors is barely sufficient to c.over the interest’ on ‘his
* (3 i’
. ,f-- -1.’ ’
39
\ >
 ’ I’ -‘r
bank loan’. The-position should be improved in ’ orders were made, there was rarely any design/
the near future since .ample demand for printed / technical information available to ssist with
* h/- circuit boards sbotild be generated by the addi- working out, the problem. Repair a t d mainte- I
\\ tional small6ale electronics units SIRTDO is, nance work iwithout written instructions from
planning to sponsor in the near future.2 ” the makers is more difficult anel takes longer
I < than when some instructions are available. After
: Meditron about one year, Mr Agarwal decided to let this
The firm of Meditron takes its name from the sort of work taper off and he now does very little
first .product it was involved with - medical elec- in this lineiexcept to oblige a few old customers.
tronics. Some work is stilldone on this, but the In the mkantime, Mr AgarGal had been inves-
rnqn products are now control panels, voltage, tigating other lines of production. His next ven-
stabilizers,’ electronic teaching aids and elec- ture came about as a result of’having beenin the .,
tronic toys. The owner of the firm, Mr Agarwal, right place at the right ti’me, Some HEC officials
graduated from BIT in electronic engineering came to BIT to a3~abou@produding analogue
in 1970 and. feeling that there was no produc- controls to replacethe damaged ones in some of
tive role for him in his family’s electronics busi- their Czechdsiovakihn machines, as spa>e parts’
ness in Uttar Pradesh, he ‘looked. for:’ other Were no longer availab.le. Mr Agarwal was the
employment opportunities.‘These.included sell- only person in the BITlaboratory when the HEC
ing scrap iron, working in an electronics’factory staff arrived, so he discussed the matter with
.,
in Delhi, and working as managing director of them and it was Agreed that he should supply !a
an electronics firm in Uttar Pradesh. This latter prototype for testing. This proved satisfactory
c-oncern was a joint venture with the State and since then h has received seve,ral orders fqr
Government and was set up through the Bhimtal I
this product.’ P -’
branch of the BISR Small Industry Programme. At the S~F& time, Mr Agarwal started. doing
Having succeeded’in making this,venture into a, repair w,or’k on HEC machines that were, other-
going concern, he sold out his share’arid left. He wise being sent to America for repair or which
picked up on old connections at BIT and had been, repaired ionly when an electronics
towards the end of 1976, a few months after engineer from tl% overseas manufacturer was
,leaving UP, he moved to Ranchi a-nnstarted to brought to India at HEC expense. Nor surprrs-
, build up Meditron.: ingly, HEC began to get a &rather favourable,
Meditron started by doing maintenance and impression of Mr Agarwal.
repair of electronic hospital equipment, mainly It was not in fact until after this initial contact
in med.ical colteges, but also in one or two larger with HEC had been made that Mr Agartial’s
_.-hospitals.mThis was-an area’bf per-sonal interest application for a bank log came up for consid-
to Mr. Agarual, but he was also encouraged by eration. Since he was already known to the Bank
the fact that surveys of the medical colleges (he had dealt withUnited Commercial before),
carried out through the small industries scheme since he-bad the small industry schgme’s name* ‘@k
had .found that about SO% of electronics equip- behind.him, and since he already had-about Rs 1
ment was out of order, of which a,bout 70% lakh’s worth-of orders on his books, the Bank
could be salvaged. In addition, the Government approved his loan without a single change
of Bihar had expressed an interest in BIT tack- (everyone else had their budgets changed even if
.
ling this problem. only sbghtly). The loan which was agreed up&
Despite this apparently good market, Mr in June 1977 consisted of -Rs 95,000 working
Agarwal quickly found that this sort of work capital; Rs lm,OOO term loan at ,14(ri, interest;
was not particularly profitable. No-one would and Rs50,000 bill purchase limit.‘The Govern-
take the decision to have repairs done without an ment of Bihar provided Rs 12,500 ‘seed’ money.
estimate of how’ much it would cost, but no-one To date, Rs 55,000 has beerrspent on machinery
would pay for having an estimate made - a task - which includes the Rs 12,XMl ‘seed’imoney.
which was very time-consuming. Even when The rest of the-term loan has not been touched
and it,is unlikely that it will nowwed since
/ Medition has beco”me self-sufficie;nt @d,,.can
’ The entrepreneur could of course havesaved himself
these difficulties if he had held back part of his loan
expand through reinvestment of its ow,n.profits..
and expanded gradually as demand increased. Rs 18,000 of the Rs 42,5%,borrowed from t,he
’ Seepage 18. ’ Bank has already beeh paid%ack. 1 \ ‘j.-
“I ‘, ..
_ h. *-. . 1
40’ - ’ ! ,, “‘
 - .
After securing the loan, bus&s began to in Gujarat. Because o&l&tower price’Mr A&r- ~ .
expand. Through acquaintances, Mr Agarwal ^ wal was given the order. This was not always the
heard that Coal India Ltd (CIL) was having case, however. Injearlier days, HEC tended to ’
trouble with the controls for vibratory feederg give orders to firms which were quoting higher :
which were imported from Germany. He went to prices than Meditron, because they were -tie11
investigate and was given a system to expqriment established and a known quantity, whereas
with. It took nine months to develop the ‘$lter- Meditron was felt to be an unknown quantity - .*
native thyristor technology and to persuade CIL at least when it came to control panels. Mr Agar- 1
to accept this. The R & ‘D costs and the time wal protested to HEC thatthey alyays came to
involvtd in development were not ‘paid for by him to do the small jobs that the big firms would -T h
CIL, but Mr Agarwal felt that he could do the not touch and even though they found his work , ~
job and that the consequent sales. would cover completely satisfactory they would not give him
his costs. . a chance-when it came to.a big job. After five
Mr ,Agarwal now assembles very complicated months, he persuaded HEC to gilve him an ,!
and very expensive control panels and is able to experimental panel so.that he could prove that ’
c-ompete favourably in terms of price with larger his work was of good quality. After this, he i .
competitors such as Voltas, Larson Toubre and always got the order if his price was lower, and
Siemens. For example; tolvards the end of 1980, sometimes he has received an order which needs
he contested a tender put out by HEC for a to be filled quickly even if his price is higher
control panel and other electrical parts for a because he can supply more quick~-~.n-bigger----~~---
plano-miller. The.price quoted by Meditron was firms. _-Mr_Agarwa-l~-Pi2%&%%
,. competitive
Rs 30,490. The next lowest price quoted was&s-- --pr@ii~ the f act that he has lower labour costs
36,950 which came from a large producer based than firms based in big cities; he has lower infl-a--m-- -- *~

Meditron’s electronic control panel,lor p!aAo-miller”“’

41
 structural and overheads costs; and he do&‘his product developmentGand di’d noihave as &i’uch
own design and engineering work. time as usual to supervise on-going’ work. He
The firm now employs five men at an average feels that the demand from big industiies for
wage of Rs 250 per month and (women) who do smaI1 aider import stibstittition work isso great?‘>
less skilled, jobs at ,Rs 120 per mgnth. H$ also that he co& take on ten times as much work.if
employs one person who had previously redeived he had more technically qualified supe,rvisory
I
some technical training and is Ijaid’Rs 3QO per : staff. r
month. All other employees were unemflloyed The second laboul problem is that it is Sery
before they joined’lvleditron and have, been difficult, to &t good clerical staff to commute
trained on the job.‘Mr Agarwal’iries to maintain from Ranchisto SIRTDO. Bus jyourneys to-and
a personal touch wl’th his employees. H$ takes frum SIRTDO would cost aboot Rs. 80 per
an interest in their families, looks after their month, which is a*lot of money given that a-
medical expenses and has a flexible appr&ch td clerical worker would only earn about ,&s 250 tier
salary increases. Business has been expanding so month. Mr Agarwal-really feels tie ne&@‘$ome-
much that he will &ploy anoths six iomen one who has a B. Comm. degree who can loqk”
workers as soon as h&moves into his newifactory” after the paperwork and release his&e for R &
in the next month o ‘so. !, .D work. These problems will bk’solved in {he
The.unit started ‘1 ith+a turnovel of ‘Rs 0.85 only se.usible way - by offering’ Competiiive
\Bkhi in 1977/78, and just three year* later is wakes to attract the type of skills required.
6xpecting to reach a turnover of Rs 20 lakhs. ,\ ‘-1 ! / -
.4.
How much of this success can be attributed to SUMMARY OF CASE
rhe role ,of the small industry scheme? hr Agar- The secret of sticress in this case study is the
Lval feels that it has helped particularly in two ability to meet small orders w&h high qua!j<y
respects. First, because of the o&ar$sation’s products at a reasonable cost; th@-eby betng able
name, he has been able to.put a lot !ess tabour to capture a niarket which is dif@&lt for either
inro acquiring sa than he would-otherwise large-scale producers or’ normal small-scale-
ha\,e needed. He R-n embers when he was rti,n- units. There is a great deal of R & D work
ning the firm i&IBhimtal that he had! to speiid involved in this’type of industry and, although
months running around looking for markets. He the ‘entrepreneyr does much of this himselfilthe
points out however that although haviing techpi- backing of the BIT electronics staff has enabled
cal backing is useful in respect of getting orders, him to take up much more complicated products
being a SIRTDO entrepreneur sometimes woiks than he wbuld otherwise hg,ve contemplated.
as a disadvantage if one of the other entrepre- ,A factor of particular interest is the way in
neurs has done a bad job for’ a’ castomer. which uneducat’ed and’ unskilled men and,
Second, Mr Agarwat feels that’if it hiad not been women from neighbouring villages have been
for the scheme he would never have taken up irained to pe,rform relatively complicated tasks
.home of .the more compl’icated of,‘his project’s/ such as assembling printed circuit boards.
products because he wou1.d not h,ave had access’ >It should also be noticed that this type o.f firm
LO thVe expensive testing equipn’lent riecded- or has few prDbler& wi,th raw, mater& or power
immediate access to a highly uatffied consul-+ supply. Bott.lenec$s in this case revolve around
tant whenever he had proble F s. supply of “brai’npower’ and tech&al super-
Even a unit as successfu as this one has its visory staff. ?*d ., “’ ’
difficulties. Meditron’s p oblems seem to con- J. ‘,
sist mainly of those relat’ g to labour. The prob- Electrical power m&M.r~w
.’ ..
lems are of two types. d:ilrst, it is very diffictilt to 1 r*
Bactiground s ., ,
I get good techni.cal1.y ualified staff to work iti% h,Electricity has riow beensupplied in India for
f
small-scale unit bet use there is no job security; @almost a century and nearly all the machinei’y
,. this means that editron is without suffi&nt associated with electricity supply is m‘hde in the -
technical’ s’upervf sory’staff who can relieve Mi country. BIT? investigations revealed thari a-n
Ag’arwal of s6me of the work buTden. The item not being produced locally was a mining
c effects of this could be clearly seen in 1979/&O* transformer for use below ground in the local
when turnover figures dropped dramatically * m:Ln@.; The trafisfbrmers being .psed wqiz
(from l&1.5 lakhs in 1978/79 to dnly Rs 0.9. %np%it2 d from Poland,. &echoslovakia .an&
\\
1%
i, -1’.
t.akhs) because’ Mr Agarwal w-&/involved in Romania and’ they wer& found to ba higt$y
\
.
L i;’ .42 /
 susceptible to breakdowns under Indian con- to the Bank in August., 1976, and“was approved
ditions. Coal India Ltd (GIL) asked BIT to look with minor changes in Recember -1976; A term
into the possibility of producing a transformer !.oan of Rs 2.>8 lakhs to be repaid in three,yeaq,-,
better suited to conditions in the Indian mines. ‘/,a cash credit limit, of Rs 2.30 lakhs, apd a biip-:,. ~
Although no underground transformerstiete cs purchase limit of Rs 1.6 lakhs were sanctioned. ’ :.. (
being manufactured in India, it was found that The term loan represented 95% of the fixed ’
most of the transformers .being used above capital require’ment . The governmem ‘seed’
ground were made locally. These locally-made money made up the-remaining SVo, ahhough this
transformers were oil-cooled and afforded some was not in ‘fact received until 1980. - .
protection against high voltage. Inside the Enquiries were made- about machin’ ry and
mines, however, the use of oil was not permitted quotations received; In the meantime, r4 search .
and until then the more complicated technology and development work continued on the dry
of making flamqproof dry transformers was transformer. Testing was d&ie in BIT labora- l

not available in India. The challenge for BIT tories and at an .electrical equipment factory
therefore was 70 design the techn logy for’ near Ranchi. When these tests provedXsatisfac- .
making dry transformers available in ndia..< ‘tory a conmmer<ial prototype was sent Lo Coal
BIT was given one of the pr 1~blematic India Ltd (GIL), for field testing >and after six ‘;
imported transformers and after two years pro- months of satisqactory serviqe, the first orders.
duced a commercial prototype of an improved for transformers started coming in. Tf?p ’
dry ttansformer. After several months’ trial,in a although -it was March 1977 when lthe $rst
particularly bad area of one of the mines, the advances were paid for machinery, it was
transformer was declared a success and orders September .I$% before ah the equipment was : ‘.
were placed for mqre. At this stage, the tech- p*urchased and installed and production of
nolo,gy was handed over to the two students who transformers began.
had been working onthe project:. They formed a In the two years before the business started = ‘: >.
partnership and staried’production. The history properly the tw entrepreneurs kept themselves ’
of their firm follows.. ‘,’ ’ ‘ afloat by doin 1 some consultancy work for
-. neighbouring industries. They also had a stipend ,
.,
Transiietz enterprises * from Sl,RTDO until Jarmary 1977.while finish-
I,.-5
Mr Zutshi and Mr Das Gupta’ became friends‘ ing R & D work on the dry transformers. The
while studying mechanical and electrical engi- total turnover during these two years was only
neering at’ BIT. Neither *came from a business about Rs 0.80 lakhs. As soon as-productionVof
family, but both had decided,by their third year tran$farmers cbmmenced, however,- turnover
that they would be inferested in setting-up a Iept.‘t$p to Rs 111I lakhs in 1978679 and again to. ’
p.i.
business together. As @nal year students they ! s 4:‘50 lakhs in I979/80. The unit-no-w-employs ’ A
P
worked on the project on producing dry’trans- eighti unskilled! workers, two clerks and four
former$fo~,t&fes. This was both interesting skillid workers at wages varying between Rs 200 ,’
I! 4
and looked like a’ promising business proposi- Crr$Rs 800 per month. All employees,come from -13
tion. At the time of graduation, Mr Zutshi was ne$hbouring *villages and were trained on the;
_I .
undecided as to :whether to go to the USA for jokj.
further education or start his own business. /Since thz entrepreneurs felt .they should not “4
Since there was a wait of eight months’before he r&y on just one product (no matter how profit- I. _~
could go to the USA, h.e decided to do the-En.tre- able it was provifig to be), they decided to div.er-
preneurial Development Programme. :Mr Das sify. They chose electronic control panels ‘as -, ’
CupPa also undertook the,course. there is a big market for this prodgct? Addition-
It was during t+e course that the project on ally, an ‘old class-mate who is ,a “specialist in ’ *
transformers was, prepared, and *Mr Zutshi as just jomed them,after leaving ,
decided to” stay in India and go into business. e-scaleelectroniss firm. While ,,
aving ‘registered the firm with 1he Director of etitors m the field of drytrans-, !
IQ ustries, a request for finance was submitted e both large-scale and sma& _ 8
““L, scale competitors in the *field of ,eiectronic“
\\ ‘\ % control panels. Transgietz manages to compe&
’ Only I& Zutshi could be interviewed as Mr Das by maintaining. a lower price than large-scale
Gupta was out pf town trying to collect some of the competitors (thr%ugh lower overheadsland better
overdue paymenis to thefirm. quality than small-scale competitors. There is ,.no I
a
.- ’
,‘43 ’ -
!. B
,
 competition with other units of the SIRTDO
. ; ,A,
planned that the firm will t,urn itse f into a :*
. estate - all tenders are by agreenient only con-
tested by the unit which is mqst in need of work
private limited company with four
These will be the two existing partners’,, the
d
irectors. i
‘i- ,_
at the time. recently joined electro,nic panel specialist, an-d a
Orders have how started coming in for ordi- recently graduated BIT pharmaceutical stirdent. i +,
nary above-ground transformers as well as dry- One ohthe new products of the Company will be. ’
transformers. An order of over Rs 15 lakhs has the niedical preparation which%& been devel-
recently been secured through a World Bank oped by this fourth director. This move is seen
Rural Electrification programme in Gujarat, both as good business sense through diversifica-
Assafn aA Orissa-. This was a global tender in tion of production, but also as a means @help- ”
which iransgietz quoted the lowest prices. ing other people to get into their own business
Contracts of this typo are secured for Transgietz without having to go-through all the initial diffi-l ’
with the help of its managing agents in various culties that the first two entrepreneurs’faced.
parts o:f the c?untry. ,?he’se are private agents It is felt that the Ba,nkwill look favourably on
ommissioti on any orders. they requests for additional;loans’since TransgieLz
lients. Transgiet-jr finds tharrhis has been a good customer overth*-;past fewp~~-----e-~i --
ng r&hnique works extremely years. The company’has repaid a good part ot;
g for markets out&deth’eimnu=, the -loan-and has been.paying back:imteRst--‘- mm1
diate Licinity., _
--
at approximately the: rate &f Rs 55,ooO ‘per . -7
V.‘ith the benefit of these, new fields of annum. An indicaiio$of the.Ban$ls faith in the
acti\ iry, turno\‘er in 1980/8 1 is espected4o reach bu’siness is that it hwd the firm secure the
ar least KS 10 lakhs and a major part of the term World Bank order (it guaranteed to pay up to Rs
loan isill have been paid back by [he end of that 3.5 lakhs if the firm fell down on the’contract). ‘,
year. Not content with these successes, the firm In addition, the Bank is. showing favourable
is now,carrying out R & D work-.into$ifferent.. signs towar{s’extending the firm’s current cash
types of tyansformers with a view to cornering credit limit so that it can cope mori easily with
e\en bigg’er markets. In particular, work is being rises in rBw material prices. Like many of the
done on pole-mounted, completely sealed t&s- other units, Transgietz ‘has been experrencing
farmers and s&If-protection devices for sealed difficulties in acquiring steel at the controlled
transformers. ‘rhe Rural Electrification Corpo- price. It tends to be given-either sheet steel-,,or
ration has indicated that there would be a large. angles, or channels, ‘but it requires all three
marker for completely sealed, low capacity types, is maintain p.roduct’ion and must there-
transforme&. Apart from other advantages,’ ! fore buy significant airiiounts on the open market
these are absolutely safe from pilfering, which is at high and increasing prices. ,-.‘

a major conqcdeiation when dealing with electri- The unit’s major problem ai been power
fication programmes in remote *areas. _N_either. cut’s, affecting its ability tawor, P at full capacijy. -T&, -
the wound-cores.nor the self-ljrotection devices Because of the cuts in recent months, only Rs 5 .

for these tr&formers are made in India? but lakhs out of Rs 7 lakh%,worth.‘of orders couldbe
through SIRTDO and rhe Intermediate Tech- executed. If trends continue, lhen out-of a total
nology Development --Group (of London), -order of Rs, 12. lakhs so far received for the
Transgietz is hoping to get hold of part of such a coming year, it will onlyabe possible to execute
de\,ide from thg U.K. so that it can be studied Rs 10 lakhs worth. Unlike some pf the other
and adapted foi production in India. In partic- entrepreneurs, Pl”lr Zutshi has not introduced I
ular, t,he,transformer and self-protection device ‘flexi-time’ as a way of coping pith p’o6er cuts
4
will have [b-be adapted to Indian conditions of since he feels that it is unfair to ask his staff to be
high ambient temperatures and an unrelidble on twenty-four h&r call. Instead, he continues I I
supply of elect;icity. The Rural Electrification r the normal eight hours every
Co_rporation has indicated that it would be will: them as fully as possible 1
lng-to put up at least 50% of the material cost of requiring only manual
developing a satisfactory transformer. The wer is oft’. Mr Zutshi is /
entrepreneurs could probably raise the remain- own generator since ,X2
ing material costs themselves. e could not afford’ ,, ‘/’
In’ 1981, a major expansion is playned with to pay, the Rs 2 la . The Depa$&pepY’ ,
new uni,ts being set up in Kashmir and Uttar of Industry has recently introduced & m@&re, I ““““.
,Pradesh to QFoduce transformers; It is also to assist small industries br providing [up to i
I , I I j
 -.
‘t
Rs‘20,OOO ‘seed’ money to buy a generator, but
this wouldnot be sufficient to be of help. The
unit would, however, benefit if SIRTDO were to
prweed with plans-to buy a generator for the
whole estat-e,..~
A further problem whjch has arisen in thelast
six months has&&n the delay in payment of bills
by customers. -At the moment, ,pending bills
amount to Rs 2.5 lakhs. This&cotrrs+zauses~a
certain amount of hardship, but the firm has
managed to keep up production by getting out-
side credit faci-lities and by using some oEits own
resources.
The unit has found the small industry scheme
invaluable for several reasons. First, as new gra-
duates, the entrepreneurs would never haY.e
*received 95% of their capital requirements f&m
rHe*Bank if they-.had not had the scheme’behind
them. Second, they could never have persuaded
CIL to put up the-Rs 60,OOCrmaterial costs
needed to do the R & D work &--he dry trans-
former vvhich formed the basis of the business.
Third, they could never have persuaded CIL to
try out the product. how the firm’s name is
known-and its reputation is established~ and
loans, material costs for R & D and offersOof
contracts are being acquired largely without any
assistance.
o 5
Sl-!!vlMARY OF CASE i?
Technology plays a pivotal role in this firm’s-
case since the extensive R & D work involved has
given it a monopoly in ‘the production, of dry-
type transformers. It would have been impos-
sible for the normal small-scale entrepreneur to
start a firm based on such a produ& - he would
have been unable to pay for the R & D costs
himself and ClL would never have financed a
small-scale’indusrry to carry out such work. The
small industry scheme was therefore absolutely
viralto the establishment of this industry, but
the entrepreneurs have displayed a remarkable
.ability to seize this opportunity and expand in
many directions in a very short space of time.
-.ii
khemical and pharmaceutical indusiries
Bdckground.
In 1971,/72, a new Pharmaceutical Department
was created at BIT. The Professor was very
much oriented towards practical R & D work
and associated himself almost immediately with
the small industries scheme. He considered the ’ I Menthol has a huge ‘market with, industries pro-
sort of pharmaceutical and chemical items for
* which there is a good mark&and which could
il
a. 46~
“,J
I
,.. .
/
\
be made by small-scale businesses. Two areas
were identified as promising. First, it was found
that most of the basic ingredients used in the
pharmaceutical industries were imported or
mass-produced locally by large firms using high-
cost technology. It was felt. that mar& of these
ingredients could be produced from local
resources by-small-scale firms if the appropriate
technology could be developed. Second, it was ;
found that ‘most drugs and mdustrial chemical
preparations being used in the area were coming
from Bombay, Calcutta, and other big cities,
and that sales prices were very high because they
included inter-state taxes, transport costs and all
the promotional .and di&ib&%nal overheads
of large, centralised producers. It was felt that
if the technology appropriate to small-scale for-,
‘mulation of these products could be developed,
there was no-reason why sma~ll-scale-businesses
could not compete ‘wifh existing large-scale
producers. I
Since plenty of land has available, BIT’ set
aside ten acres for the clltivation of medicinal
plants, from which small-scale units could
prpduce extracts/The plants included pepper-
mmt,‘Ja.panese mint, citronellaand lemon grass.
!Equipment for extracting oils was developed. by
the mechan@al .engint/ering department and
laboratory tests were carried out by the phar-
maceutical department. The cultivation of soya
beans was also slarted and .work ‘done on’the
small-scale processing pf soya oil and soya milk.
This work has led to the formation of one unit
near Ranchi producing menthol’, and another
unit on the BIT campus (Nutrients India) pro-
ducingsoya oil and soya milk. It has also played’
a vital role &he rural development.programme
described in Chapter 6: There is a huge potential.
for starting -up small industries, in this line.
Advantages include the fact that most, of the
plants can ,be grown on waste land and do not
require irrigation;! theL processes ,a6 mainly
manual and can therefore besarried out in rural
areas; .they are labour-intensive and so create a
maximum number o.f jobs; and costs are low so -
’ the small’producer can compete with larg -firms,
to the ultimate benefitof the consumer. 1
2 With respect to the s‘ cond area of wo I
iii - the
small-scale formulation \ of pharmaceutical and
chemical products - a production unit was
. started in this, line as early”‘& 1974. This ” was
,,ducing toilet preparations, nasil preparations and.:
..G
cigarettes. >.,i
.
:z..

Bihar Drugs, which is looked at in.detail in the
following pages. Because of the special nature
of the main product of this industry, ‘the pro-
motional aspects a presented somewhat of a
challenge. When dealing with life-saving drugs
(in this case fluids for intravenous injections)
good quality is not just important, it is essential,
and the organization did everything in its power
to ,ensure that quality was maintained while at
the same time trying to prevent too much dire@.
interference. Having assured themselves that the
i
firm’s products vvere.of adequate quality, the
- staff then turned their attention to the equalt’y
difficult task of convincing the medical practi-
tioners that this was so. Together with the entre-
preneur himself they have been so successful in
breaking into this difficult market that the Eirm
is now expanding its production facilities in
Ranchi and is about to establish markets outside
Bihar State.
W’ith one formulation industry successfully
off the ground, SIRTDO has decided that it
should encourage more entrepreneurs in this
line. hlost are stiI1 in the early stages of develop-
ment, but it is interesting to review them briefly
before going on toZ,look at the case history of
Bihar Drugs.
A bank loan t‘or Paediatric Laboratories has
just been sanctioned and the entrepreneur is
waiting to move into one of the new sheds on the
SIRTDO estate to commence production. It has
taken him tvvo years of work in the BIT labora-
tories to develop. the six products, which he will
be producing. During this time he was being paid
a stipend by SIRTDO through’its re-investment
assistance funds. SIRTDO also aid for all the
R & D costs. 4 The enterprise started off in space allocated-
Chemit’ India has only recently started pro-
duction of industrial adhesives in afaetory on
the Tupudana Industrial Estate. The entrepre-
neur brought this idea to SIRTDO along with
two or three’ other proposed products. After
careful consideration, SIRTDO advised him
that the adhesive wa%probably the most feasible
product and decided to sponsor him to start pro-
duction. Before this, all industrial adhesives
came from outside Bihar State. The firm is still
building up its market and i+ning &t -techno-
logical difficulties. With 1 SIRTDO’s help
samples are being tried out by various siate-
owned firms which report back on any defects
noticed in t.he product. Or&e initial ~diffieuhies
have been overcome and good quality ‘is
achieved and acknowledged, this should prove
to be a profitable enterprise.
47
..
\
Lastly, as soon as a shed is available, Jayno
Pharmo Chemicals will be;egistered as a small- !.,
scale industry, apply fer ailoan and commence
prodnction of a drug intermediary..SIRTDO pas ’
supported thrs future entrepreneur for the Rast
twd-and-a-half years while he perfected ‘this
product. It also paid for the work he Carrie d out
at the National Laboratories in Lucknow to
/develop a pilot plant. ,ti :_
,i . ,I
Bihar Drugs
Mr Dey, the owner of Bihar Drug-b, is not a
graduate, but washworking in t,he pharmaceu-
tical laboratories oTB1.T at the t&me that BIT/
BISR was looking for potent&tl entrepreneurs in
this ‘field. His father, who has had years of
experience working in chemical factories, was
also working at BIT at this time as a public
health, analyst. Both Mr Dey and his father
became interested in the small industries scheme
when they saw that the first few entrepreneurs
were beginning to make progress and they were
the first to approach the organization’s staff
about setting up a sniall-scale pharmaceutical I
unit.
A project proposal was drawn up on the basis
of production of a few si.mple items such as
injection fluids and also on an entirely new ,_,~~~~”
product - malt extract from wheat bran -,”
which was developed, in the phar,maciutical
laboratory and ‘for which there.,was’believed to ”
be a huge market. The Bank”approved a term - ~
loan of Rs 40,000 at, 14% interest; a cash credit
limit of Rs 70,QCQ”and a bill purchase limit of Rs
20,OOQ.Theterm !oan has since,been paid back
r
in ft++ll.
-
by BIT in the campus marketing centre. This was
a considerable’?help financially in the early
stages. In addition, BIT/BISR loaned, on a rent-
free basis, certain electrical eguipment such as
an air conditioner:“AnindtiXt?ial licence was dif-
ficult to obtain because of al ,the formalities to
be gone through according i1b the Drugs Act.
This was eventually obtaine, and producti
began in a small way in 1974.P .
In the beginning, the BIT laboratories
useful in providing facilities for the rigid testing
procedures through which each batch of drugs ,,*
had to go. After a while, the unitacquired its----,*’
own small testing-unit, b&t at BlT/BISR’s-stig-
gestion, a-portion of each batch was-also sent
to a major testing ,)aboratory in Calcutta.
BIT/BISR was very anxious that every possible
check should be made, since the major product
- /‘-:
/”
,A-- I
 \vas a life-saving drug. It e\‘en offered to pay for. labour is paid”lfCs.5 per day and,skil.led labour :
this’ additional testing if the entrepreneur felt ‘Rs 9 - Rs 10 per day. ?;he entrepreneui’s two I’--
that he woul:d be unable to cope with the added brothers also work ‘for vhe fiym. .
espense. Expansion is;now being planned. Land -has (
J-la\,ing established that the drugs produced,;been purchased,in Ranchi town and ti 1,oan has.- ‘?
b$: the unir’ivere of a high quality, both, BIT/ cp been approved 9y the Bih.ar State Financial C,6r- 1
BISR and the gntrepreneur went about building poration to construct a new laboratory. This has I
up a macker for the produce. This was 3 partic- to be repaid wjthin two years. The five?skillBd ~,
ular problem in the cas’c of drugs, where trade- em@oyeed who have wbrked with the firm for ;
I ‘.
names aGe of such great importance. BIT/BISR the past six years t&l be given the option of con- , ‘z
helped b!. asking the Department of lndus<iy.to tintiing to work for it after the mo?e. If they wish. ‘,
poinrnut to the Depntment of Health thaigood’ to do so, then accommodation will be built for
qualit!’ drugs \\‘ere- a\,a.ilable from this small- them in the compound of the new laboratory.
bcale unit and that it’should be giipen preferen- In additiqb,:it is hoped to st’art selling in West ,L’
rial treatment in goiernmenr$l purchase of Bengal. A sales representative will be employed ,;
drug\. The entrepreneur went-‘about promoting to buitd up the market in this state.
hi4 product b-y taking free samples tobocrors in Althdugh the progress of the firm has been ,(‘+=*
\ariou_s ho\pirals in the area. He concentrated fairly smooth, there have nevertheless bee’n -)
on those \Xh&b had a good! repu;arion, even if certain difficulties, many of which still affect the -
IhI, mcanr initially settling at a loss, because this firm’s competitive status. A niajor problem is
\\a\ ~nlporranr in building up a name for the the securing of raw n&erials. TheState Trading
‘t‘lrm. Corporation and rke Government-controlled +
I-he unit acquired ordcri oser time, but company, ‘Indian Drugs and Pharmaceuticals _,
c\pnndsd more \io\\Iy than growth in demand Ltd, are both authorised to supply the reqlilred
u ould ha\ e allowed QI as to be able to maintain raw materials, but they will only sell in bulk.
qualit!, and reliabilit!,. A major uphea\,al was This means, for instance, having to purchase a
~\p~ri~n<cd in 1376 u hen the unit had to lea\*e minimum of 25 kg of Vitamin B at a time at a
the BIT markering centre because rhc State cost of Rs 3#0,000. Since rhe.firm c&not afford
Go\ernmtznr waj objecting to the use of the pio- to do this, it must purchase its raw materi--aIs in
pert!’ for industrial purpose>. .At this time, the smaller quantities from the Bombay%narket at
unit mo\ed to it{ ij%ent location, a privately- prices approximately 1090 h’igher per kg than
ou ned building al:%osr eyuidistant between the those charged by the authorised ggvernment
SIRTDO “ouilding and the main BIT buildings. suppliers.
Thij mo\t‘ i\aas inconvenient .an$ the cost of; Another problem is that there is no laboratory
rrmodclling the building l+as a financial burden, in Bihar which can test products which contain
but the jet back v,a4 quickly o\:ercome and busi- vitamins, so these ha\‘e to be sent to Calcutta for
nta\j continued to impro\,e. Initially, the firm testing. The necessary equipment is very espen- ’
\\‘a\ ha\ ing t.rYtakc it\ product to the customers, sive and wduld be far beyond the means of the
but at‘rcr,a while many ot‘ the customers srartcd firm to purchase. However, such equipment will
coming tb the laboratory to purchase’ supplies be pro\,ided in a new pharmaceutical laboratory
directI!,‘. At the-momei;t, drugs are s,old directly being planned by SlRTDO.
from the laboratory and i-hrough a mxketing Power cuts have been a problem for the unit in
stall in Ranchi to\vn. A ricksaw is used to trans- so much as their water distillation plant is’electri-
port drugs‘into KYJN II to keep this outlet stocked. callv operated and all their major products use
* The firm now supplies many of the hospitals/ ydistilled water.. Production gets held up there-
clinics run by the large industrial undertakings in fore when the distillation unit is not working.
_- the area and nearly all the missionary hospitals To combat this problem, the firm has recently
buy their supplies from he&G&-latter are pos- ordered a coal-fired unit for Calcutta which
sibly encouraged by the fact that the firmgives a apparently is capable of giving the same output.
1Oro discount on all drugs which will be used to The only difference will be the need to have
help poor people. someone constantly cleaning up the coal dust.
At the moment, nine people wo;k for the The firm is also thinking of p.urch+sing a small I
firm. Four are unskilled and five are skilled? The generator for light’ing purposes a& then it will .-L
latter ha\,e be& with the firm from the ver) be almost totally independent of central power
beginn,ing and were trained on the job. Unskilled supplies.

48 ’ ; .-
I _ - / *.;
 * /
, . -4’
. :
b- L 0

The economics of the major product - Blood the State to olfer as security, he again needed the ’
Transfusion Fluid - is as, follows: organization, as a guarantor, to secure the loan
5 from the State Finance Corporation for his
Empty bottle Rs 1.75
-3 expansion plans. It also played a useful role in
Liquid (including distilled water
helping to bui.ld,up a market for his products. ..
and power) Rs 1.25 ~_~ .- ~--
.’ Now the firm is falflyindependent, although Mr .
Rubber plug, aluminium cap and
hanger Rs’l .OO Dey still sometimes consults the B&T staffabout 3 -
Labour, breakages “‘-, Rs 0.50 new products. Once the new SIRTQO .pharma- II.
\ ceutical central facility is bui ill’of course ~- ;
TOTAL r., ‘\\ Rs 4.50 make use of this - especially
‘.,-
\ facilities.
b he minimum selling priceis Rs 5.5lper bbttlel,
so the minimum profit per bottle is Rs 1.00.
Sales are stable at approximately 6.,000 botYes
per month? so annual profits fromjust this one the product. The
product-come to Rs 72,000; . - .- -- t&hnology involved in .formulation industries
The firm’s future looks sound-.- The mission- is not very complicated, but breaking into’ a
ary hospital9 are regular ~customers and more market which is so concerned about brand
orders are now coming in from HEC-, Central names is not easily done. Success in this case-
Coalfields.Ltd-;--an&& er large industries in the must be attributed mainly to the entrepreneur’s
area for their clinics and h&pita&. The firm has marketing skills and’ his ability 40 constantly
just signed a twolyear contract to suppl-y provide good quality products. It must also be
medicine (t’ransfusion products and patent partly attribtiteXd to the faith whiiih.,th,e&u-ket
drugs), to Meralluigi~,al and Engineering Con- places in any product having the technical
sultants Ltd. There a&,many other potential backing of BIT/BISR.
markets with which it. c&inat.,,,,cope at& the
-..,
moment because of restricted capa&y,,b,ut this A sick unit -7
9
situation will change after plans to expandhav.e .IBack’
., , .,..,,.round
Q’.,
.:
been implemented.. Mos f of the SIRTDO units have’hhad their ups
The entrepreneur’s youngest brother is in his and downs and many have been on the verge of _~_
final year of a pharmaceutical degree at BIT and total disaster before struggling through tolbetter
also plans to join the firm, probably after days. One mrit which has really not-been able to
further training abroad. Of the fifteen students dope with fh~roblems it has had to-face is <he
in his class, no more than two or three are inter- Ranchi Rolling w In the current terminology
ested in setting up their own businesses through this i’sin fact classified& a ‘sick’ unit in as much
the SIRTDO scheme. He feels that this is as it has been c os&for the past year. The xX
because the risk is still too great in the’phar- history of this u it is’reviewed sin\ce it is impor- :
rnaceutical field, given that trade-names are still tant to look at les successful vent es as well as
so important. Although there is a huge market more successful,‘,,..~~~~: ‘i It is also inc 4 uded in-the
for drugs in Bihar (20% of all drugs taken i‘n. hope that it q&.: d some light on he sick unit ’
India every year are consumed in this State), 4 issue at,.atime ’ a high proporti’ b n of small- 0
there is still a tendency to think that any. drug scale units in B te can bqth& classified.
produced in Bihar cannot be of good quality. _ To be fair to SL it needs to bd stressed at
Bihar Drugs has been working hard at dis- theoutset that u&pt of thi\ty-two is a ,‘.
proving this notion, and it is hoped that once it remarkably good
I\ has a well-established name more BIT students needs to be stress
-abe encouraged to start up businesses in this giving up hope
line. &- ‘; ._.,,_ In the early
Mr Dey fe‘el.s..that the organization’s help was ‘construction bus1
much needed in: get,ting the initial loan to start by extensive buil
the business. Also, since he ownspo property in. Defence. After an a
-y;,l.-.
,sttident, the staff de
’ This compares with ds 7.50 to Rs 8.00 per bottle to sponsor a unit- in
from Calcutta-based firms? -steel rods to meet d

49 ‘,, ‘* \ ,,.,,,//. I’:!“’

 industry. Although “such a. unit would require Ranchi rolling mill
heavy machinery, a &&at deal-of electrical power After graduating from BIT in civil engineering,
. and heavy raw m~er’$l financing, the tech- IV%r,Jain, the owner of Ranchi Rolling Mill, !
nology involved was’relat.ively simple and it was travelled to the USA to pursue his intere,st in ‘,
thought that this would bea good basis-for-start- modern techniques of structural fabrication.
ing up production and acqmring and training a His plans did not work out and after twelve
labour force. It was eqvisaged that the unit months he returned to India and became a
would eventually go on to moduce speciaLroll partner in his brother-in-lab’s steel and scrap- 5
section. dealing business.located 30 miles from Ranchi.
Having decided to sponsor tl&,unit, the diffi- It was $ile working there that he became/aware
cuIry arose of findi.ng a suitable I+ation for it. of the plans which the Ministry’of befence had
Three entre$eneurs had already’:...,been spon-2 for starting new construction work in, t;he area,--,‘
sorrd, but thep’were working either,.,,out of the He drew up a prop.osal for’ a small-scale unit ‘; _
BIT workshops or the main building, because of which would produce +e’ type of construction
the amount of space needed for a rolling mil’l, an steel,‘likely to, be required,, and a proje@‘appli- -‘,
.aIrernati-ve solution needed to be found”for this cation was submitted to the United commercial :
\
unit. At this Time, ‘the organization. had no Bank in February 197%~: ----..,_
money f-or building sheds, so the State Govern- .ln May 1974,. the Bank approved a loan con- .
ment )vasCapproached and asked to provid&the sisting of Rs 3 lakhs term loan; Rs 1.5 lakhs cash +
finance.. As we shall see, ..itivas the delay in &- credit limit; and Rs 1.15 lakhs bill purchase .
ting funding for the shed which started off ‘*a limit. Three months later Mr Jain placed&he
M.hole series of delays and complications which yurder for the rolling mill.
 . \
.-
concern at this stage was finding a location for’
-the’ unit’ and, having no funds of its own
a shed, the organization’approached t to operate profitably at this time given the deci-
GoverneenE for finance. Negotiations
going on regarding this when Mr J
arrived in May l+975. By this time, over a year
had elapsed since submission of the project pro-
pgsal to the Bank and owing to inflationary rises
in theprices of machines and raw materials since
then, both -&Ii;-J&n and the scheme’s staff fe.lt
the amount of thelloan should be revised. In July
1975 an,appli;itation was submitted to the Bank
requesting an enhancement of limits to Rs 4.15.
lakhs term loan; Rs 2.35 lakhs cash credit limit;
and Rs 0.3 lakhs bill purchase iimit.
By September 1975 the staff decided that the
unit would really be it-fro&e-if there was any
further delay in securing a shed in-which to
install equipment and start production.,. They
decided to..hand over some resources so that
construction. of the shed and installation of
equipment could begin. Production could still
not commence, however, until the new limits
had, been sanctioned by the Bank so that extra
funds were available to purchase all the neces:
sary equipment.
The sanction was not received until July 1976
but almost fmmediately after this Mr Jain was
informed that, on the basis of a telegram from’
ye Bank’s headq.uarters, the. renewed limits
we@ going to be kept in abeyance. At this point,
BIT/BlSR arranged for a meeting at the head-
quarters of the Bank in Patna. At this meeting it”
was decided that the entrepreneur should find
from his own resources the extra Rs 1.15 lakhs
needed for fixed capital so that he,could start
production. Once the unit had started pro-
duction, t,he renewed limits would. become
0peratYI.e: -.>
BIT/BlSR helped as far as possible by/paying
for extensions to the shed, part of the chimney
for the furnace? and the security deposit for the
H.T. connection. In April 1977, the electrical
connections wefe made and in the following.
month a trial run was made. Production started
in June 1977 (three years after the first sanc-
tioning of the Bank “Ibad)-even though Mr Jain
had--been able to procure only Rs 0.8 lakhs out
“-.
of -the-f% 1.15 lakhs he needed to become fully
equipped.
Problems with finance &I%%& to plague
the unit. Even though the-Bank had’&reedthat
the renewed limits would become oper&ive once
production commenced, it now became reluc-
tant to commit the whote of the cash credi t limit
so as to enable quick rolling. This may have been *
because of an ungertaiay as to the-unit’s ability
sion taken by both Central and State Govern- ’
ment to halt construction work for a year and 0
the consequent collapse in the price of construc-
tion steel: ’ “by ~’ ‘1
Whatever they’eason .for :the Bank’s attitude,
it caused the rawc\ material dealers to lose trust
in Mr Jain because & the ,d$fficulty he experi-
enced in honouring’payments. Despite these 1
difficulties, Mr Jain managed to’keep the mill ”
running - largely through ut,il,izat:lon of his own
resources& the absence of a‘ny significant fund-
ing from the Bank‘:
In the following year, themarket picked up
when Government construction w.ork recom-
menced. Unfortunately; the rolling mili was by
this time in so many difficulties that responding 1 .__
to the increased demand was almost impossible. ‘-
The Bank continued to release only small
amounts of cash credit at a time and because of
his worsening reputa’riori with the raw riiaterial
dealers, Mr Jain could not obtain credit for the : ”
necessary supplies to take on worthwhile o- ders. , )
6n top of Ithese’problems were those of eavy
maintenance and power costs‘, th.e heavy rden i
d /
of.interest o‘f both the term loan and the cash
cre>dit limit and a spate of breakdowns. Between
July 1978 and March 1979, there were f,our ‘,, ., I,
major breakdowns in quick. succession. Of ‘.
particular concern was the faci that the burnt:- I
out motor could not be totally rewou-nd because ’
of a lack of funds..and this-led to repeated fail-
ure. During this time, Mr Jain even withdrew t’he
small amount of’ mohey .in .his child’s savings
account to keep the mill runhing.
In February 1979, the entrepreneur requested *,
the bank to release the sanctioned cash credit .”
lim.it so that he could pay an impending elect& ,,L’
city bilk of Rs 70,000. The Bank demanded ‘an
equitable1 ,moitgage in order to release the, 1
enhanced limits:--T,his was readily provided in i
the form of a:,plot of,land owned by Mr Jam’s
mother and valued at Rs 84,‘OOO.While this was
being processed, the electricity lines were discon-
nected and i,t was almost three months before
they were reconnected and production could
again commence. By this‘iime, the excellent
market conditions ‘had almost come to an end +)
with the onse\ of the rainy season.
In August’ 1979, the electricity lines were ‘)
‘again disconnected, but restored three
later as a special gesture
Electricity Board after just a
?
 account. By now very little fmance was left, and purchase sufficient raw materials. ‘Thus, the
in an attempt to get the unit going again Mr Jain BITJBJSR staff feel that despite the inherent
borrowed Rs 50,000 from a financier on a short- pitfalls in this’ type of industry - iricluding’high
term basis and deposited this in his credit -requirements for. finance, ra% materials, and
account. Unfortunately this amoupt was of little -‘power, and a large amount of competition -. the
iuse’since t,he ov,erdraft in his credit account’had firm co,uld have been working successfully by L
risen-to Rs 37,000 due to interest accumulation now if adequate amountg‘of working capital pad
and the Rs 50,000 was balanced against this. been release&at the appropriate time.
There now seemed to be very little that could 9 ;pt
be done in the short term except run on .a con- A convalescent &it - ,~, *
*
\,ersion basis (re-rolling scrap on a labour charge _’
basis) so that at least salaries could be covered. -Backg’Bund --
Whene\;er such work could be found it was ,T,htslast,case study tells a stor,y which is both.
taken on, but unfortunately this caused :-- remarkable and encouraging. Of all the case his- .
increased suspicion on the part of- the Bank tories, it is the one which probably best captures
because.it became aware of thebact that the mill the essence of the SIRTDO approach,.for it /
was working but that there were notranSactions shows how, with’appropriate backing, an enter- ;,/
going through its books. ’ prismg and determined entrepreneur can over-/ .
In February 1980, the. electricity was again come difficult circumstances which would have ’
disconnected since by then a total bill of Rs 1.5 completely eliminated-any other small business.
lakhs was ovving,. This of course meant that the The organization has sponsored two mica-.
mill \vas again forced to close down production based industries - one to produce organic -
just as the season of peak rdemand was begin-
micanite and the other to. produce inorganic*.
.
ning. The unit has remained closed since this micanite. The case siudy is abopt the latter unit,
time.. which is now through the woryt of its troubles,
although by.no means completely healthy as yet.
SIRTDO has spent a great deal more time on
Hence t-he reference to it being a ‘convalescent’
the steel construction unit than on others, and B’
industry.
mainly on financial problems rather than on
Interest in mica-based industries started in
technical or+,marketin’g problems. Thestaff have
1976 when Indian Railways mounted an exhibi-
done eieryt h.tng they could to help’Mr Jain,
including lvriting letters to the Bank’s head- tion in Ranchi with the aim of identifying local
entrepreneurs who could help in solving various
quarters to state their belief,in the viability of$he
production problems. One of the problems ,jf
unit; attending meetings with Mr Jain at the
which was brought t.o BIT’s attention was’that :,,’
Bank’s headquarters in Patna;, helping him to’
of local production of ‘organic micanite to sub-,.’
I+ork out estimates of profitabiiity; persuading
the e1ectricityboa.rd to accept small payments on’ stitute for imports. The staff felt ‘this would
account; and lopking fo!.financiers who might form the basis of a small-scale unit and gav,e.ihe
id,‘? to a production engineer currently .uuder- ,
back the unit. during peak demand ;periods.
g@ng the Entrepreneurial Development Pro-
Unlike other units, SIRTDO has’lalso helped out
gramme. Initially, he studied the t,&inology at
financially on a loan’basis to try o help Mr Jain
the theoretical level and decided it could be
to get started’properly.
Assistance has of courseJ c tmued since the simplified and made more labour4ntensive and
last closure, of the unit and, due to the staff’s that, pr_ovided good quality resins could be .
efforts, the Bank has at least been persuaded obtained: good quality niicanite could be
to ‘freeze’ :t-he loan so that’the interest stops produced. SIRTDQ then arranged for the entreT. .-.
mounting.up while the maiter ‘isbeing further preneur to work in a large-scale unit producing
considered. micanite $&that he could study the problem at a
practical le+. The two months he spent there
SUMMARY OF CASE was paid for by SIRTDQ as part of the egtension ’
Here we have a classic example of a Cirm running to the entrepreneurial training.. It became clear
into difficulties through under-financing. There during this time that if quality was to be achieved ‘”
have been feb; t.echnological problems and the using manual techniques so that production
market for cpnstruclion steel has been adequ,ate could be carried out on a small-scale basis;the
and frequently excellent. Many orders have been lqbour would have to b’e skillful and very well
turned down mainly because of the inability to trained. Having identified-t& or three highry- .:
 4
n .j > ’
“,,. .,,,, c
“‘-.,,,.,.,., .,.,. ,,. .,. .,_ ,,. .(_

skilled workers, the firm of Mica*ge’was regis- levelling machine from the U.K., but the Bank .J,_‘\
tered and production commenced in 1‘978. would not sanction a special loan and ita
There have been a few ups and downs for this impossible to acquire an i
firm in the past two years, but it is now doing orders were given in writing
fairly well. As we shall see, the problems faced
by the other mica-based ind-ustry - Inbomi -
were far from easy to overcome.
._ sultan* advise on alternative solutions Cor
Inborni imported machines for improving quality., but :,
Mr Raza, the owner of Inbomi, graduated from there seemed. to be no immed’late answer. The
BIT, in mechanical engineering in 1976, regis- machine could be made locally, but such firms
tered for the entrepreneurial development pro- would not consider going to tbe\troublt and
gramme and’ started looking for a suitable, expense of making a one-off machine.
product on which to base a small business. His 4 The same difficulties were experienced with a -
father, a specialist in glass technology, suggested glass. epoxy laminate which was-also-being used
he should look into the possibility of producing as an’alternative to impor.ted klictric motor and
inorganic bonded micanite and allied products geneiator parts. -The Inbomi product was found , .
which could use the same facilities. This was dis- to be of unacceptable quality; but it was-strg---- ’
cussed with BITIBISR and he was encouraged -
to study the idea further.
At the railway exhibition mentioned earlier,
he identified several mica-based and fibre-glass
components which were listed as being needed
and which he was interested in trying to produce.
The next stage was to find the technology appro-
priate to producing me-m-of interest on the loans, payment ;,of rent
for; a shed, payment of electricity bills, wages, .
etc. There was however no turnover to cover
rants in Calcutta. Two of&e~ofessors at BIT these c&tsZ Fortunately the situation, although
were also able to hei$?%entually, a sample of a diffic,$r, was not as problematic as it might have
commutator-&&q~or (used in electric motors been. The Bank agreed to allow postponement
a$gef&ators) was?ieveloppd in the BIT labo- of interest payments until production could
,_,iTatories and sent to the Chittrangan Locomotive commence. Mr Raza was even &llowed’to draw
$
Works (CLW) in West Be,ngal for approval. up to Rs 500 per month from.Qis’cash credit limit r I
In the meantime a project proposal was drawn during this time t-&for two employees to /”
up and submitted to the Bank. A loan consisting guard the factory and machihery. Similarly, the
of Rs 1.82 lakhs [elm loan, Rs 1 lakh cash credit Department of Indtistry agreed to wait for pay-
^ .< p---
Ii,mit; and Rs 0.25)‘iakh bill purchase limit was ment of rent on the. shed until production
sanctioned and 6election of machinery com- started. Finally, although Mr Raza had signed a .f
menced. The government also gave Rs ‘15,000 two years minimum guarantee’ for electricity
‘seed’ money. After some delays, a shed was supply (amounting @about Rs l.,OOOper month .a,
obtained on the Tupudana industrial estate at for 30 kW), the StateElectricity Board took no’ .d,
Hatia. After fUJtheJ delays, necessary infra- action other than c&G.ng off,supplieS when pay- * I
structure such as electricity, water and.telephone ments could not be made. I ’ C.
Although Mr Raza continued to participate in
lines were supplied and a start could be made on
tenders and bid everything possible to find.-.- ‘--mu;-
installing machinery. Eventually production work, he could secure no definhe orders for his-
was ready to begin in October 1978. micanite and fibre-glass products.
Difficulties now arose in getting otders. On In mida1979, some engineers from the TATA ’
the basis of the sample which had been sent by Electric and Locomotives Company (TELCO)
the fir”m, CLW gave a verbal assurance that large visited SIRTDO:to see whether there were any
OJdeJS would be placed for the product if quality entrepreneurs w.ho could undertake production
could be slightly improved. To achieve this, it of truck components for the. cbmpany on’ an
seemed it would be necessary to import an ancillary basis. The staff explaiged that lnbomi --
.r
-
expensive (Rs 6 lakhs) precision sanding and had a heavy press which could possibly be used0 -
 ,~~““.aLa---
(
” -’ ._
> s f--- ._ 1 _. ,,I
.‘ - -5o/” / /’..2
* to produce .such components.irH&viihg inspected disruptions in the area, TELCO decided. to
both the lnbomi facto@y and the,SIRTDO work- diversify ‘and look for ancillary firms iri other
1.. chop facility, the fEI-c,O erigineers said that parts of the counpy. It now has 2,600 ancillary
they could offer &?k in sheet metal items if un$s and a minimum of three firms producing
Inbomi wa+ble to produce items of satisfactory each,compofient so Qat production is ensured.
qualily. The ‘.proposed order was for 2,500 The ‘company is very ‘keen on encourqging
,coupling mounts and 2,5,QO air cylinder brac- techno-entrepreneurs such as Mr Raza because it\
kets. The main problems were-.$(+$ring good feels that they are l@ely to be more quality-
quality dies and adapting the existing heavy con$ious th <-normal commercial entre-b
press to cope with this work, ? o is more interested in turnover. This ”
is why they offer help in the:$orm of the-free ’
services of their engineers to advise on die . ,
making. Apart fr.om provision of raw materials,,
------- and oflFrs 033iteresf - freeloans, they also take
as he thought at first that it would be the only a lenient attitude towards maintaining p,ro-
wa> to reLi1.e his unit, MJ Raza persuaded the duction schedules whGn the cause of the delay is
Bank to sanction a special loan of Rs 25,000 for beyond the entrepreneur’s control. This was
the making of the dies in Calcutta. The approval helpful in Mr Raza’s case when there gNere very
of this loan $vas helped by the promised Order bad power cuts in July and August which caused
from TELCO ,and a ‘written assessment from him ‘to fall beh&d in :his-schedule. The main
SIRTDO saying that this was in its opinion a thing in which thk Sompany is interested is
rrchnically and economically feasible venture. Quality, and Mr Raza ensures this by using good
As ir happened, the dies were eventually made dies and maintaining the standard of work-
on the milling machine in the central facility manship. ”
worhshop. This took the entrepreneu hanks to this regular work, MJ Raza has now B
months, during lvhich time his factor ost paid off his e!_oc&ieitycdZ~. He is starting
closed, but the cost was only Rs 10,000, which ‘=‘topay arrears-ofifhe rent of his-shed, titidhe‘will
,SIRTDO agreed he could pay later when his shortly be in a position to Start paying off the
business picked up. This meant that’ the Rs interest on his loan. He is now emp,ldying nine
25,000 sanctioned bv the Bankcouid be used for people: one die-maker at Rs 400 per month; one _>
other essential ivork, such as adapting the heavy supervisor at Rs 250 per month; six sem&skil-l&6
press for metal sheet work. During this time, he workecs at Rs 150 per’wh-(-he-liZ$& to raise
seceiied a great deal of help and advice from this Mture); and one representative at
,.-- __-.-- SIRTDO staff and also from the-TEL,$Z& Jamshedpur to liaise with TELCO. This repre-
engineers. .-.. i.-
sentative receives Rs 250 per month from Mr
F\‘ork on the dies was’cohipleted, sa@,pies of Raza but also works for one other herson. The
rtie automotive qmponents were fourid c@ be supervisor lives behind the factory in ‘accom- ’
5atirf%ctooy, an.&\production begalf in M’arclpi’ modatian provided by Mr azq.. The die-maker
1980. Production of these and other cornpa- is a valuable asset while he s,emams (such skilled
nents for TELCO has now started bringing in people are normally paid tq ee or four times a&
a regular @urnover of Rs 15,000 per month. much). Two new dies are c d rrently being made
i TEI$O is so satisfied with the firm’s work that in the SIRTDO workshop and will be used, in
it h& offered to give an interest-free loan so that fbur or five mont.h&time. 1r “‘_
new machines can be bought and the range and MJ Raza now wahts his own die tool room so
. --‘ijuanfity of items produced can be increased. that he can make and correct dies on the spot. At
Raw materials are not a problem since TELCO the moment, if aqything is wrong with one of the
supplies the required amount of steel needed for dies, he has to carry it all the way to SIRTDO -
each OJdeJ. It also has supplied dies made in its 40 km - and all the way back again. He is start-
own workshops for inany of the items ordered ing to equip his tool room by selling the scrap a-
i ” from the firm. metal he ticcumulates after cold forging the
At this stage, it is worth men.tjoning the. truck fomponents frpm the sheet metal sqpplied.
c special involvement, of TELCO. The head- by TELCO. I.f@r/ Raza$&ctory had ‘beeii
quarters of TELCO are at Jamshedpur and until located on the f&&-se~yL”&tate rather than a!, .>’
197 1 its ancillary development scheme was Tupudana, he rr$ay have felt less3urgepcy about
concentrated in West Bengal. After industriat developing hiS 6,wn capacity in this respect.‘The-

3% u 54 \,
I
 7. ...
.
location of his factory has other implications. their factories. Finally, Mr Raza needed the con-
An advantage. is that the sheds at Tupudana are stant support and encouragement he was given
permanent, whereas those on the ‘nursery’ during a very difficult period. 1
0 ,’
estate can only be rented on a temporary basis.. A
disadvantage is that ttis,difficult to get accpm- SUMMARY, OF CASE
modation nearby. -\ Of interest in this case.is rhe fact that a mono-
, Mr Raza ultimately inter&to return to pro- poly product was identified which could form
duction of his original line. ‘He still has the the ba$s‘of a highly successful firm, but ,that
* equipment he needs and he has spa&o expand... companies would not place written arders until
Having earned enough money from she;et;,metal quality was improved and the machine needed to
working,,he hopes-to be able to buy the,expen- improve quality could not be obtaimed-_unt,il
sive machine which held up his micanite promo...orders were placed in writing. This sort of s?tua- --
duction ,two years ago. He is already getting ~fion must, arise in the caseof a large rmmber of.
orders in the fibre-glass line. He recently got an smah.indust?ies, causing the demise/of more i
order worth Rs 70,000 for fibre-glass rods from than a fmY,
HEC. Also, when TELCO switches from sheet- had it rr-en for -the--determination of the.- ‘1: ;
metal to fibfe-glass components, which he entrepreneur to b311 through and the interest of .
believes is only a matter of time, he is on their the BIT/BISR staff i&seeing that he did so, the .
priority list of suppliers. At the moment, most of firni would’ have folded *er such adverse
the operations in fibre-glass production are done circumstances. The way in which%
manu,aJly; but if production picks up Mr Raza neur converted his equipment to
hopes “to be able to buy automatic equipment components instead of micanite
(e.g. i’acuum impregnation plant) to’ improve both skill and courage. It is doubtful whether
quality. such a scheme could ever be contemplated or
SlRTDO’s help has beenr invaluable to Mr achieved by an .entrepreneur who had. less
Raza in several ways. First,. he .n_eeded ~the _technicaLand financ.ia-I backmg and-less -moral ---
organization’s backing to get hisloan and the support.
additional spec.ial loan for modifying his * The case study is also interesting from the “-yYy
,C.’
machinery to produce .truck components. point of view of illustrating the working rela- ..’
Second, it kvas through the scheme that he was tionship between a large company and one of its ,,“’
able to make the contact with TELC,O, which ancillary small-scale units. Other companies’ ,., i
leas vvhat gave him his second tease of life-also may differ from TELCO, but in this casp+he,/‘^
TELCO only offered an order after inspecting arrangement appears to be highly be,@cjal-to
and being satisfied with the central facility work- both parties and suggests that anqlt&y arrange-
shop. Third, had it not been for the help of the ments should be encouraged,,where possible. The
organization’s engineers and the subsidised use ancillary unit (unhke.most small-scale’ indus-
‘of the workshop for six months (plus allowing tries) has no worries’abo~trt-.ra,y materials, gets ’ -
delayed payment), changeover from mica- ‘interest-free loans to expand droduction facil- I
bonded products t uck components would ities and is assured of a regular income2,.ln
have been far more ficult. Fourth, Mr Raza return, the parent company,is assured a sup&+--...... _
-‘-..___
and the other entr neurs on the Tupudana of high qualitdr components at.a lower cost than “\
Estate needed SIR ‘s weight behind them to would be possible if they were made by the I
get the minimum frastructure installed for company itseLf.
.~ /-
 .., 1 i
-----.., ; i I >
.’ -sY_ x.
The scheme’s success. iri’r&Dect of eljtreore---!
, 1

not be measured only in

--

5 EVALUATbN bF THE ’
SMALL-SCALE INDUSTRY
w SCHEME,
General averview
There can be, no denying that the approach
_ -,--
adopted in the Ranchi scheme seems to be work-
ing well. Engineering graduates who’ normally
I tend to prefer the status andxs’ecurity of a per-’
manent job in government or bigaindustry havq
.been persuaded i&tead to take to the,iisky b&i-
ness of starting their own small industrieS. In
addition, the industries they. have started,,(with..
only one or two exceptions) have man$ged to
thrive at a time when many small units in the
* area are goirig through severe difficulties in the
face of adverse economic conditions. Also, the
model has already be& accepted by the Bihar
.--x_- Government, the Uttar Pradesh _--_ Government
and the m~??oG<-zgzas one which
is worth try’ing to replicate elsewhere. T’hus, the
three important areas - entrepieneurial devel-
opment, develo.fiment and lprbnfotion qf profit-
ablesmall firms throughan@teg,ratedapproach,
and dzevelopment of a model, which can be and ject which the entrepre&urs
is being replicated elsewhe iie - have all been suc-
cessfully tackled. Each of these areas is looked at
in turn. _--
_--
Enrrepreneuriul developm’en t
Motivating technical students and graduates to
set up,their own businesses has not been easy. As
was $en, for the first two or lhree years, only ‘iraining courses run,?by SIRTDO tend to be porp
four entrepreneurs were involved in the scheme.
However, once it was seen by others that they
were doing reasonably well, the process of moti-
vation became less difficult. More students than
can be presently handled through the-scheme are
now requesting sponsorship and mahy ex-,
. students, who have been in paid employment for
severa’l years, are now interested in re[&ning to
Ranchi to start a small industry or to join one of
their ex-classmates who has already established
a uniC. ’
’ Most of the entrepreneurs said that ex-classmates
had been in touch with them regarding infqrmation
on starting a business. Problems in paid employment
included low wages, lack of r.espo,nsibilityand lack
for and attend-
eneurial develbpment
erious. In India as a
no more than ‘about.
nding such cohrses
ment’couises run by S1,~TDO, 4,7’Kavegofie on
to start small business afid all bu-t,on$or twb tire
doing well. In addition, ?iRTQO has success-
fully’ identified. and prom&ted -several. er&.e-
preneurs who did not attend-the formal &ur’+.
The staff attribute their success in thislyespect
to four factors. ‘pirst, since the eqtire f ’ r-ykar
‘teaching course at BIT has an ind$&alJy-,
related slani, final year students are ilrea’fly
well-steeped in the viftues of the practical appli-
cation of their research. Spending their fid:,al
year on .an atitual industrial project. furthbr
increases,their interest. /
Some of the most successful businesseh,
including Transgietz, have been based on a pro-
were working’on
while they were students. ”
Second, #though all potenlial entrepreneui;
v are BIT graduates and are’ thus well know9 to
the SIRTDO staff, a very strict screening pro&zess
is still applied to&applicants for tyaining and
eventual sponsorship through the schemk:
Third, as was seen earlier, the entrepreneurial1
practical and more r,elevant to small industry
than those run eli;ewh?re. This vocation,
‘oriented approach ,‘intensifies the gtudents’
interest in sma-l’lifidiistry
. development.?
‘\
of job satisfaction. Some- (eg. Transgietz) have
already been joined by ex-classmates. Many of the
current entrepreneurs, including- those owning
Mercurium, Meditron and Ranchi Rolling Mill, left
previous paid employment to start their own
businesses. \’
z Only three of the nine entrepreneurs covered by the
case stud& attended a formal entresreneurial
development course arid there seems to ibe little
difference between their performance and that of fhe
others. It should be noted, however, that those who
did not attend a course started their,business in the

56
-
‘....___
“...---....___ X.
“‘‘1.
 t
.

.I
0’ 7, 1’
a,
: ’
_ 0

Finafiy, ,the entrepreneurial trainin& period Further, most of the”.,entrepreneurs are not
.-,
extends right through the ‘nursing’. period of the , concerned with producing just anything to earn
scheme,-when the entfepreneurs build up their money; they are-genuinely interested in, their *”
confidence to make decisions and take risks. In product’s value in terms of saving imp pay- .i
other ,words, they build up the essential qualities ments (Transgietz, Precision Found) 3; 3 or ‘,
of entrepreneurship while they’have the.security reducing the price of basic goods to co-Rsumers
‘- of’SIRTD@ backing behind them. This is an (Bihar Drugs). ’ ,
importapt feature of a scheme which deals with Finally, unlike mapy commercial,. .% entree- - -~ -.
people who do not come from an entrepre- preneurs, the SIRTDO entrepreneurs believe in I
neurial background. Under this cover, firms acquiring markets through, quality and skill.. bl
such as PIF have risked taking on very large rather than by eliminating competitors.’ The II
orders; firms such as Meditton have risked going philosophy is one of supporting the small-scale -~- -._
a
1 I into very complicated and sophisticated, pro- sector. They never take markets away from each
ducts; and firms such& lnbomi‘have risked other and where possible they tI;y to help each h ‘,
2 --,
investingmo~ne~ in adapting equipment to try to other and. o;ther units in,the.district through sub- r i
save the unit from closure. i -contracting arrangements. ij >
As was seen earlier, the objective was not just It is still toot’early to-see whether the staff’s I
to identify and train entrepreneurs, ,but to pro- objec[ive of cfeating a class of self-reliant entre- ’
mote a new class of techno-entrepreneur3 who preneurs has ibeen ,fulfilled. To date,, only three
are cbncerned with more than earning maximum entrepreneurs have actually left the ‘nursery’
profits. To what extent has this been achieved? estate and moved off on their own. Of the :
The entrepreneurs are, of course, interested. in remainder, most have been under SIRTDO’S~ 1
profit and most units,,after initial setbacks, are wing now for more than the three years esti-
providing their owpers with adequate returns. mated, to be”sufficient time to rear a.self-reliant,
However, the SIRTDO entre.preneurs are entrepreneur. On the whole, the entrepreneurs _ ’
undeniably different from normal commercial do seem to be reluctant to leave the ‘nursery’ I
entrepreneurs! , estate, although most are now making impor-.. 4
Technology and engineering skill are talked tant decisions wiihout undue reliance.on the ’
about -far more than turnover and profit. Most SIRTDO staff. For example: PIF took on the j
of the entrepreneurs speak with a sense of large turnkey job for Coal India Ltd without
achievement and satisfaction about the way in consulting the SIRTDO staff. Similarly, Trans-
which technological adaptation or development gietz decided to start up new units in other
. has helped to esptablish small-scale units which States, take-on additional partners and diversify .
can compete with large firms in terms of quality into new areas, and Bihar Drugs decided to
and price. They are particularly proud of the expand within Bihar and in West Bengal pith- i
high stanhard of goods they produce and place out seeking the SlRTDO’s staff’s advice and . $,
their reputation for this above the possibility of guidance. :
increasing short-term profits thrqugh reducing It is’interesting to note that most of the entre-
standards. - preneurs never mention the role which SIRTDO ”
This attitude towards profits vis-a-vis other has played in the development of their firm. ’
considerations is carried through to labour W,hen telling their story in their own words, they
relations within the units. Most employees are inevitably refer to the way in which they solved _.,
‘paid more than the minimum wage; many are a technological problem or acquired a new
given thorough training so that they.can work market. Only on the second telling, when the
with semi-automatic or manual machines; con- entrepreneurs were specifically asked to think . :
sideration is extended in terms of working hours about the’way in which SIRTDO had helped, did we-/
and working conditions. Most employees are it becdmeaapparent that the staff had in fact i
well pleased with their jobs. helped out in almost every stage of the develop-
<
ment of the units. This feeling among entre-’

J As was seen in the case&f Perfect Forgl ,gs, the

&rly years of the scheme when there were ewer units normal practice of small cati~ercial entre $ reneurs
if
being sponsor6d and the staff had more tjme for each is to acquire markets by undercutting compgtitors, *
unit. As the size of the scheme grows, the formal thus harming everyone’s,chances and weakening the
course will become more important. sector as a whole. ’ ) c ,*
-
57

.7
I
 .- I
‘.j .&$p
_.
Fixed Capital* “70loan Working Cosr per, Power Requiiements No. Employees
r
, [R’s lakhs] repai;l Capital Workplace N
Y JRs lakhs] (Rs lakhs] _
-.
PIF I 0.43 100% 2.200 2,867 15/k&w IS!. )
-I 9
P?escisionc ’
Foundry ’ I.46 3ovo 0.325 6,667 4.75liw _’ I8 ?.’<
Xlercurium 2.60 40% I .320 P
14,445 fpopv D I8 / i’.
Perfect . /
Forgirys 3.60 0% 2.900 I 1,560 fil).(Y)kw ’ 3i
hleditron 0.55 42VO 0.950 5,ooo ;2.25kw ‘,$j II D /.” .
TranQkirz 1.82 35% 2.300 13,000 38.oOkw ,l4.
Bihar D’rugs 0.40 _ IOVYO 0.700 4,445 9.7Skw I_ :9 ,.
Ranchj
i
Rollin Xlilt 3.80 ihO I.500 I 1,850 ‘=?; 68.OOkw 35 - 1
lnbomi 7 77
&_&_ 0070 l.OCG 21,888 i( 30.OOkhV ‘9
_.. : .,.-.
-1 ~ - ...-__ .._. _ ~..~. ~__~~ d . ..y.~A--_- ~---.-..
Pr
.A\.ERAGE I .65. . I.440 IO.484 “p .- 15.66 -: a c
!e
* None of the entrepreneurs have yet needed a term loan IO purchase a building a djor land. Fixed &vestment e;yludes these
irem>. _I &*, -.‘I
Y f ’ 1, h-
\ .-
1,
preneurs, bf accomplishcment without undue tally relate to besign or adtiptation of the &?ch- o
. assistance, is one which greatly pleases the staff. nology so a> to>ave on capital and piiwer c.osts.
I - For examples PIF does’ awgy with the n&?f --i
Development and pro’motion of small firms for expensive lifting devices by making use ofi
I b. As can be seen f?om Table I, the amount large numbers of casual labourers who are.easily ,y
invested in.each SIRTDO-sponsored unjt is well available in- the area. The owners of PIF,
below the defined official limit of Rs 20 lakhs Mercurium’ and Perfect Forgings use more
pertaining to small industries. Other characteris- skilled labcour and put in more time in’terms of.
tics of the units also qualify them to be included $raining,%i<nagemeiif and sup,ervision, so that
in the small-scalp s;ectoi. The cost of creating they Fan utilize lower cost machine from Punjab .’
a workplace varied between Rs 3,000 and Rs as oppqsed to high-cost machines from well-
22,000 - the approximate ave.yage being the <known local firms or from abioad. Savings are i’,
Rs 10,000 which is normally given a.s typical of particularly Jarge in Mercurium”s case due to I
the small-scxfe sector in India as a-whole. This extensbe des$n’,work which allowed the pre-
compares wiih estimates pf costs tier workplace viously automatic process‘ to be broken down 1
of Rs 50,000 in heavy electrical firys; Rs 100,ooO into individual operations.and su@titute$man-
per workplace in heavy machine building plants; power for machinery where ,possible. PreBsion ;
and Rs 160,000 in the steel industry.’ Require- Foundry uses mainly manual techniques, and’at
mems for power are also mainly well within the times of severepowci cuts, a coal furnace canrbe “ ’
75 kW limit up to which incentives/subsidies are used ~,&@r$%aking the cnt.ire factory almosf;!:
available through the Government’s siall-scale e$-endenL of a central power source.
industry incentive programme. ,.,‘Ab:
’ __‘- In some cases, capital costs are a‘lso kept low
d In most of the industries, inveswt’costs, by using production facil.ities in t)he .s+ +
cost per workplace and powe_r-;eq<irements are workshop - avqiding theiTee&tC$rchase
much less than woulcLb+=ex’bected for the type of costly r(achines which would be unused fot
product being -i%anufactured. This is due-to a much of‘the t4me; ‘This wa$seea to be partic-
yariety of fagtors - although all of these basi- ularly true of PIF. Siniilarly, the electronics
firms, such as Meditron, can utilize the central. .’ ’ :
/ ‘-
.photoprodessing facility when they need high ,
’ Panditrao, Y.A., Financing Cotrage and Vilhge quality printed circuit boards. ?’
lndusfries, Commerce Pamphlet page 7 (see Biblio- One of the major arguments put forward ..
grwhy). agaiust small-scale firms is that--gheid cost pP?’
1 , II
_f . i (1 , : .‘,
58
I
 unit and their, sales ric is often higher than
3. $
in larger firms. This 1s b sed on the principle
that ‘mass production will result in economies
of scale to the ultimate benefit of producer, and
consume; alike. Prices quoted by SIRTDO-
sponsored firms, however, tend-to be very com-
~eti&~+@@t%ple, Star Engineering and PIF
v;“ereable ro,retail a r,eciprocaring coal feeder for
only Rs l7,5OO as opposed to a minimum of Rs
39,OO@$r the importedvariety. Much of this, of
course”ivas due to differences relating to import
tax, freight charges and labour costs. only subsidy which‘theyhave taken advantage of ’
However, PIF and several of the other entre- to any great extent-is the electricity subsidy of ’
preneurs have also been able to quote prices 9 paise on 45 paise per‘ unit. Other subsidy
which are considerably lower than those quoted schemes are either not appli,c@ble in the Ranchi
by large-scale $ndustries locate?! in India. The district or are bureaucraiidally difficult -50
most notable price differebtial is that between obtain.
PIF’s chain creeper at Rs3 lakhs, and the Rs a Even allowing for the role that technologica! ’
13 lakhs quoted by Voltas, the nearest competi- developments/ arid direct and indirect subsidies ‘,
‘i’
tor. Other firms have lesser, but still significant, have played in keeptngcosts low, it may be sup-
price advantages. For example, Mercurium sells posed that costs have been cut at the expense of \,
bolts at 25%.Pess than the nearest large competi- quality. Ttiis has almost universally ‘not been the ‘,,\ /’
tor. Meditron has just produced a control panel case. As was seen, products are of a high enough 1
for a planomiller for Rs 30,490, as opposed to standard in some of the firms (eg. ‘Mercurium ,’
Rs 36,950 quored by the,nearest large competi- and Perfect Forgings) to obtain certificates from ,,’ ’ : ^’
tor. Perfect Forgings sells steel balls at Rs 6,000 IS1 and Lloyds. This is practically unheard of in ’ \ .’1
per tonne, whereas the main producer in the the small-scale,sector. Congistently high quality 3 ‘.
State was selling at Rs 7,000 per tonne even three has been the basis for firms such+Bihar Dru& ;’ .
years ago when raw material prices were much gaming a foothold in difficu% markets where :
louver.. Bihar Drugs has prices down to 30% brand: names predominate, while high qt$hty i
less than those of big firms located in the main has enablgd firms such as Inbomi to secure con-
cities. tracts with quality-conscious firms such as ji
What helps the SIRTDO entrepreneurs to TELCO. Meditron and some of the other elec-
offer such competitive prices? Part of the tronic firms are able to supply goods of a higher
answer, of course, liesin their low fixed costs per standard than small-scale industries in ,
unit. As has already bekn mentioned, equipment this field and ture any market in- which ’ ~
costs are kept low. Infrastructural and manage- large-scale pr&tcerz&e
rial costs are also low - the owner carries out In general, SIR?TDO-spon 1’
many of the tasks which would be assigned to ,,have a reput,ation in the State for pro&icing ’
special managers ih larger firms. In addition, high-qualit$go.ods:-‘This is a t&&t-b&h .of the
although there is <cry little difference between staff encouraging the entrepreneurs-%be---. .‘- _
real wage rates in the main cities and those in the quality-conscious, a@ helping them to be so ’
Ranchi area, money .wages are considerably through assistance with design of machines and a
lower in the latter. This g?ves the SIRTDO entre- dies and the, provi$on of testing facilities. It is
preneurs an advantage over their lange-scale appropria,te go-mention that the entrepreneu.rs
competitors - many of whom are located in also encourage each other to’maintain quality
-main cities. since if ‘one entrepreneur does inferi.or work it,
reflects on all the others. I, .-.i
The SIRTDO entrepreneurs do benefit from
substantial subsidies in the form of assistance With low prices and high quality, are the -’
with R and D, free technical advice, use ofBIT’s SIR.TDO,firms profitable? This is something
Y
, testing facilities at a nominal char-e or which it is less easy to be specific about. It is ,p _
3% subsidised use of central ‘workshop facilities. probably safest to say that most of the firms ’
These are’the sort of subsidies which are sup- made very little profit (or even made a le;ss) in
posedly available to every small entrepreneur as the first one or two years of operation - mainly
part of the Government’s programme to help due to ‘difficulties in establishing the right _
.a
, , 59
) -. I
r*,I. : .
 is‘5,
iI
. b
3 = = = ’ .- *. ”

product and/or in acquir?ng ; mtik‘eis. co; :‘&qFjring ade’iuate quantities of raw niatdrials* -
example, changes in policy of Goall lnd’ia ‘Lt.d either because stocks are not available at all, or
cau$d initial difficulties for PYF; Mercurium because stqcks are not available$t the gov&n-
had prac$cally no rurnoi’er until Governm&t ment-controlled price. The problem. is often
contracts’ were secured; Precision Foundry compounded by the fact that cash credit limits L>.
struggled along ivith normal fabrication work are no longer sufficient to allow for the purchase -.
until tl$ contract M.ith the Export Corporaiion of enough raw materials for a good production
was s&red; Transgietz had to survive from run. This was seen to be a particular prdblem ’
consu’ltancy fees until field trials on their dry with the metal-process-ing.and electro-mechan-
transformer ivere satisfactorily carried out and ical industries.
orders were placed; Inbomi was in deep troub1.e Other problems which have contributed to
while trying to develop micanite products and under-utilization of capacity are: difficulty in ’
has only begun to reco\.er after switching io finding technically-qualified’ supervisory staff
1 truck components and acquiring regular orders (eg. Meditron), and a lack of working capital
from TELCO. due to late payment by customers for completed
Ha\,ing established a market, however, turn- orders (eg. Mercurium).
o\er and profits ha\,e generally increas$d very Despite these problems, most of the firms are
quickI!.. In most cases, profits could have been now making an adequate profit. One way of
increajrd further in rhe short term by raising assessing his is the extent to which loans are
prices and/or lowering quality. To a large being paid off. The Manager of the branch of
elrent. however, markets have been built up the bank concerned with the scheme estimates
through offering good quality prbducts at com- that only about 20,070of SIRTD”0 entrepreneurs
pcriti\e pr;ce\. To alter thi$ so as to try to make are falling behind on repjyqnt schedules, as
jhur[-rcrm gains, would probably lead to loss of ‘opposed tp between 40% and 50% of small
hard-\+on market5 in rhelong term. Aswaaseen, entreprenedrs in Bihar as a whole. As showl+in’
it tooh a lot of time and sometimes a lot of Table 1, PlF’and Bihar Drugs, being the first
money (ciirecrl>, or indirectly) to overcome cus- units to start, have already paid off their term
romer3 caution about buying from a \ma~~i‘irm. loan. Offt he rest, most have paid back 3Q - 50%
I:or clampIe, Jlcdirron had to spend a lot of *of their term I,oans and are still well within the
Iirnt’ and money in.*con’\ incing HEC‘ that large agreed repayment period.’
~onrrol panels could- be Gtist‘acrorily produced ’ The staff of the small industries section atsthe
b> the firm,- e\en thou& HEC’ thought highI) Bank’s headquarters in Calcutta are so satisfied ’
of the \3-orh done on smaller orders. Bihar Drugs with the performance of the SIRTDO units that
had to inlest a lot in giving free samples and they are now actively entouraging other dech-
sellins 10 thos$ho\pitals \\hich would help ,the nical institutes to adopt the same sort of scheme ’
products’ reputariorj - cvt’n if this meant selling so that the Bank’s j8b of lending to the small
at a lo,>. industry sector is made easier and more.cffcc-
The firm&,could, ho;+clcr,
:’ -b c more profitable rive. Following a visit to BIT to study the ~~odel,
if \olutiorls could bc found to a variety of prob- the ‘staff of IlT Madras are about to start a .
lem> (niojrl>, of an injtirurional rlaturc.pcculiar s,‘imitar schcmc for developing and promotiug
to India. but not unknown elsewhere) which small-scale units with financial backing from the _,
affect their abititv to work at full capacity. United Commeraial Bank on the same terms as
A major factor affecting the rate of production agreed with BIT. Several technical institutes in
is the number of power cuts. As was seen, this West Bengal are also in the process,of st!tting up 3;
resulted at time5 in Perfect Forgings’.output similar schemes b.?%d on the model wo,rk&l out-
dropping from 35 tonne5 to 15 tonn:s per between BIT and th,e Bank. It will be interesting
rn0ut.h; Transgietr \vas able only to produce Rs 5 to see if these schemks meet &h the same degree
lakhs out bf the KS 7 lakhs of orders secured in of success as the’one in Ranchi. _ r :
1979 - 1980; Bihar Drugs cannot work at full
capacity \vithout power for its water distillation
Replicatiility, ‘- ‘ G?
unit; and Precision Foundry can only o.perate at
An obvious question to be asked about the
about 6OVo capacity when :here is no power to -I
run the fan for the oil-fired furnace. ’ Ranchi Rolling Mill andlnbomi
Another important factor contributing to tie anything off their loan ‘for reasons w
under-utilization of capacity is- the problem ot discussed,
c 1 -_

60
 .. k+
d‘

. ,
,C

\ /.
Ranchi scheme is Whether it can be replicated ,+The college staff involved in the scheme fe ‘.,,.-$
elsewhere. To help in providing an answer and in there are three major factors’:‘holding ud .,
identifying which circumstances are of partic- 1
progress.‘.-First is the problem of creating a, 1
ular importance, it ‘is useful to examine other x
interest arhong the.students in the idea of sta ‘-
related centres in India. ing their own business. To tackle this, theata f f
.have decided to try two measures. One is to give
Bihar governme& technical college small industry-related‘projecK6 final year students;
industryschemes the other is to encourage those giving seminars
As was mentioned earlier, the Bihar :Govern- on industrialization in Patna to hold them in the
ment has directed. that the goverriment-con- college so that the students can be exposed to
trolled technical colleges located at Patna, these.
Sindri, Bhagalpur, Muzaffarpur and Jamshed- The second problem is that of lack of funds.
pur should start small industry schemes similar Qnly a small proportion of the total funds, - z.
to the one developed by BIT/BISR at Ranchi. dromised by the State Government has&t&ly--E- __
Of the five colleges concerned, only Patna could. been released, even though-the planned five-year
be visited and this’is used as the basis for ,period is now almost over. i
comparison. I The third problem was said to be the lack of
Towards the end of 1977, the technical college heavy industry in the immediate vicinity which
at Patna received the first instalmenf of the Rs 50 can provide a good market for the products of
lakhs which had been promised by the State esmall firms. This is regarded as-an advantage
,Government for the purpose of starting a small which the Ranchi centre has over them. It is true
‘industry development programme. This has that the small- firms sponsored by the Ranchi
been used to build a large workshop and admin- centre do relate closely to neighbouring ,heavy ,I
istrative offices in the college grounds and work cause it seemed to be the
has started-on four ‘nursery’ sheds. College gy in that particular
teaching staff,and technicians will be expected to uitful to think in terms
work on the scheme over and above their normal y for the Patna area, I
college duties, but there is no provision+for per- low closely the Ranchi
manent sta_f. to work with the entrepre~uis. esigned -for different .
>The only fully-fledged entrepreneur is an
ex-student who left a well-pai’d job to start his Despite thes;‘e’p&blems, at least. a start has-
own business producing tractor parts. At the been made, and it is encouraging to note that the ~
moment, he produces away’ from the campus staff sound genuine!? -enthusiastic about the
and the only input from the scheme in this case scheme. It is too early in the day to tell how suc-
was technology devdopment. The entrepreneur cessful they will be in identifying and sponsoring
secured his own loan, found his own building” small-scaie techno-entrepreneurs, but there are
“and his own markets. Two0 potential entrepre- some ob$ous points which can be made which ‘h;
neurs are occupying’space in the college work- ttirow light on possible developments.
shops and, are involved mainly with electrical First, in the Patna case (and possibly the
products. others) the -idea o.f_prom_otiting-~te~~~~~~tre- --
preneurs came from the outside = the Govern- . ~~.
B-” ment - and; however enthusiastic the staff . i
’ Patna is in any case one of the edjr
sound about responding to>the.directive, it can
developing srriall indu’stry activities, although no-
p%l%bly-ReYgL__be the’same as carrying ou^t a u
are v;ery far advanced. In Sindri two sheds have been
built, but are not yet occupied’. The two entrepre- *
programme which~~~-evol-ved_froin &hin In +
neurs for whom they are intended are working in the
particular, it will be .interesting to-see if;the- ____ ., .,
college laboratories. Sindri has one of fhe best high college teachmg staff are willing to divert’as ~-
voltage test laboratories in the country and it ‘is much of their ‘research’ time aw’ayfrom conven-
hoped that units,wh.ich can make use of this facility tional research activities as is .the case at BIT. -.-.-.--.
I will be promoted h‘ere. in Bhagalpur. there are two Second,.while Patna a d-the other colleges have -
entrepreneurs working on small household electrical the input of govern’ J ent promotional funds,
appliances but as yet there are no sheds and no work- they do not have the mput of permanent staff to,
shop. Nothing has happened yet at Muzaffarpur or. work full-time on the’small industry sche.me. In ,
Jamshedpur, although in the latter case it is believed Ranchi’s case, this/is the input provided by ‘- ---
a workshop is nowunder construction. BISR. It will be interesting to see hcrw much can ’
 be achieved without provision for permanent, The Jaipur Centre was starte$by’ Dr N.G..
;, = technically qualified staff to wqrk with the Nair, the present diiector, who left the BIT
entrepreneurs. Third, whereas Patna and the teaching staff aii”d joined BISR in 197.2 for this
other colleges are government-controlled and purpose. Jaipur was chosen as a possible centie
offer conventional academic courses, BIT is because of the interest expressed ‘by the State
autonomous and better able to* gear the entire Government in having= BISR assistance to build
teaching syllabus towards the practical apblica- - up small-scale electronic industries. The State
tion of engineering’s industry and business. Government eventbally decided to do this
This difference is ‘tarried through in respecE of instead through its own effor:ts by setting up
#
the actual ‘training of potential entrepreneurs, electronic development and test centres rather
Patna and the other colleges rely on their th,an by giving its full suppprt to BISR. How---- -
students receiving training through SlSl-run ever, BISR proceeded wit)4 plans for its own ’
4_.--
Entrepreneurial Development Programmes centre.
i
(EDP) which are almost totally theoretical8 in While negotiation? .we, e going on with the : ,i.b’
nature. As was seen earlier, BIT. runs its own government regarding b &necessities such. as.!” . .
EDP courses (“through SlRT.DO), which are land and infrastructure, r Nair converted p.&
much more practical in nature (see pa e 21). of his.own residence into i makeshift labor,at’ory
Not a great deal has been accomplis’ 4 ed as yet and set about identifyin ‘areas of IsearCh and
in terms of development and promotion of small potential entrepreneurs i Eventual1 a ten&acre
p /P
industries; but it should be remembered that, plot in a somewhat rem&e area of 1 nd intended
even at the Ranchi centre, it took-quite a long for future industrial development was allocated
-’ -,-time to build up the scheme. However, the dif- to BISR. No buildirig or infraS-ti%ctural develop-
ferknces which exist between Patna and Ranchi ment had begun’on this land and, rather tharr--,..
should be’ given careful consideration and delay tiny further, BISR decided to investFits own
- appropriwe action taken by the managing com- funds in sinking a tubewell so that work cqulc! .
hittee and/or the State Government if success is commence. Even $9, it was not until‘ 1976 that .’
A to be assured. Perhaps the most significant dif- the building had been- comaeted and equipped , J
ference which could be acted upon is the absence and worthwhile woik-could begin.
‘, I. of any permanent staff at Patna working futl- In addition to Dr Naif, the Centre now has s,ix _1
‘time on small industry activities.\. ii scientists, four technicians, and sevkral support
-- ._ -. o staff. .All are permanent employees of BISR. _
BISR small induslry schemes There are sewrat @boratories, a workshop, a
White the techhical colleges in Bihar State..&ve small library, a seminar ioom, and space for
two of the elements of the Ranchi scheme: the ‘nu.rsing’ two or three entrepreneurs to the stage ’
technkat college and the government promo- where commercial production becomes feasible.
tional funds; the other BISR centres have only To date, twenty entrepreneurs have been spon-
one elemenr: the scientific research, institute. sored - vainly in the electronic fields. Of these,
Ho)v well can such an institute perform wi!hout one is stilt In the main building; five Are in their
the close integration with a [Fchnicat cpllege and own factories on.iand under tease to BISR; one is
the State Government?Of the t-hreec+m-con=- renting a government shed just over the road
cerned, the one located-in J%pui, the State i _~._
Capital of Rajasthan, offers the best basis for ---_
comparison. ’ -‘---.A.-,,
to investigate the Ranchi Centre. The centre m .--
c Bhimtal is still in its development stages but has been
’ The other two centres are located in Uttar Pradesh. established mainly to help the industrial develop-
The one in Allahabad has developed sev.e@ pre- ment of th_e backward hilly areas of the state. Its .---
cision components to be used by In,diati Tele,phone research facihties and thus the industries which it will
Industries, GEC, and others, A nti$ber-.gf mechan- be helping to develop will be mainly-in--f---
ical items developed by’the centre are being used as electronics, special paper and. medicinal plants. The I
exportable power-plant accessories. Research on possibilities of small-Scale powe! generation using
hand-made paper technology has been starteil the region’s perennial rivulets will a,lsobe an area for >”
’
recently. It is of interest that the Government of exploration. l. . 6
Uttar Pradesh has extended its support for the estab- f The first entrepreieur to be identified actually
lishmerit C( a small-scale industrial estatz under this started doing investigatory work in I$$ makeshift , .
centre, following a visit of UR Government officials labora’tory. ‘\
, ‘\,
/I \\
!$!I
1 +
‘62 I,. < . ___ ..-
 P rh

\
from the main building; and three are working in B SR, that he develops the confidence to take’
their own or rented premises in Jaipur. The risk s and make decisions.
remainder have; started factories elsewhere in .qnce satisfied that production is commer- ‘1
Rajasthan or’ outside the State. As far as could ‘ciaBy viable, BISR asks the!. entrepr&eur to :-
be seen during a short visit, all but one or two of move out on”his.own’and set up his own f a+%-+-
( the units are workjng successfully. H.el’p’isgiven with drawing up a project proposal
‘The objectives df the Jaipur centre are more for financing; and advice is given ‘if necessary ‘I
or less the same as t!he Ranchi centre since BISR on choice of commercial ma‘chines. Although
established both with the idea of assisting young there are five entrepreneurs located on BISR \
engineering graduates to start their qwn indus- land, there is no concept of a ‘nursery’ estate in ’ ‘\
tries. H-bwever, the method of work is suffi- Jaipur’s case.. These five entreprenetrrs--of-- --.
ciently different to warrant some description.. course, all the others sponsored t r_ou.t the- M---
Since the Jaipur centre is not integrat.edwith at Centre -beeom~ totahy indi$endGr of it once
technical institute, the potential entrepreneurs they are declared commercially vi le. This is
cannot be identified from ‘in-house’ as happens because BISR cannot get involved int commercial,
in Ranchi. Given the tradition of commerce in production, and unlike the Ranchj ce tre, there ---
Rajasthan, this seems to present very few diffi- are n’o state government funds availa k le to ~~give ,’
culties, and there are too m?ny potential entre- any promotional support to entreprene‘urs once -.
preneurs seeking sponsors rp rather .than too their firms are registered ,and have gone into
fek.. However, as with the Ra chi scheme, a tho- production. There is, therefore, no concept of
rough screening process is u d to ‘ensure that .giving technical and managerial supervision to i
only the seriously interested nd most deter- new units in order to sect& loans!’ After the J
mined of enquirers are given sp nsorship. ‘nursing’ period, the BISR laboratory and.work-
Some ‘of the entrepreneurs\ b ‘ng their own shop facilities continue to be freely available for * *
ideas for products, but more often they become R & D work on product diversification. -Testing ’
involved with one of the technologies which has equipment in the workshop is always availableat
been developed at the BISR centre. Unlike the a nominal charge.? Except under-special circum- *,
Ranchi area, there are. no ,significant heavy stances, machines such as lathes: and presses
industries in Jaipur which could provide a needed for production purposes.cannot be used 1
market for the products of small units. Identi- by entrepreneurs>ho are no longer under BISR .-
fication of potentiil products tends to be done control.-’ BISR allows the- entreprenewfs’ !t”has,
therefore through constant research by the.BlSR sponsored to continue to use its name when seek-‘,
staff into rrade journals and similar sources of ing new markets. In this case; BISR insists that “:
information regarding market conditions. R & high quality is maintained and refuses the right j i.“\_
D work is then carried out in the laboratories to have its name linked to a product if quality is ’
and workshop in respect of those products found to be unsatisfactory.J
vvhich seem to have a good potential market. It is interesting
to note that besides work
Product selection on this, basis is obviously directly small-scale industry develop-
related to ’
rather more indirect and less certain than in ment and promotion the Jaipur Centre also
Ranchi’s. case, where the BIT/BISR staff can
,..-.._ jq
discuss marketing possibifiries directly with __/-..”
potential customers.. r I -c .! _I .. -_
This makes the ‘nursing’ part of the scheme , 1,’
’ Given the morT.favourable banking environment in ,, ‘L.,
important in Jaipur’s case because of the time
normally needed to. allow the entrepreneur to ’ Rajasthan, this’has not reallyprQved-roo much of a ’
problem.
experiment until he has a commercially viable
’ Interestingly, although the Qovernment-funded ’
product.-- During the ‘nursing’ stage he experi-
Electronic Development and Testing centre (which
ments wit-h various production runs from within is adjacent to BISR) contains more ancf;better equip-
the main building- Hehasnn fixed overheads in .
ment the-t
respect of rent, electricnti, or machinery and he deal by industries in the area. khis i‘sttiotight ‘to be -~-;,..
.,&*i~$
has free access ‘20 all BISR staff and facilities. because there are too many fdrmalities,and too few - ,i
‘” This’ sees h’rm through a difficult stage during sufficiently qualified personnel. ,,I
C.!
which many new entrepreneurs fail due to 3 An exception is the production of dies. ’ . .,-
inability to cover overhead costs. It is also ’ The work o.f the Jaipur Cenke is further described by
during this time, while he has the backing of means of some brief case historiesin Annex VII.
 carries out apblied R & D work’ for ind&tries
and government departments in the area! For
examgle, in collaboration with the Electi ‘Bni$
Trade and Technology Development Corpora-
tion, an undertaking of the Department of Elec-
tromcs of the Government of India, a- -12’/ 14”
solid state portable televisionset is being devel-
oped. Negotiations are also going on for colour
TV work. Full commercial rates are charged for
such work and it is hoped that there will even-
tually be a spin-off in terms of opportunities for
small entrepreneurs.
Future plans for the Jaipur .cenire include
‘exmng the workshop area and facilities and
trying to get niorehmd~from the government
for entrepreneurs’ factories close by. With the
0 recent opening of a chemical laboratory, there
af;e also plans to start sponsoring entrepreneurs
droducing chemically-based products such as
. paints, paper and glues and resins for phenolic
I laminates. There seem to be no immediate’plans
on the 6ai-t of the State Government-to give any
financial backing to the Scheme. ;-
E>,en without the integration with a technical
college and the b&king of government funds for
a ‘nursery estate and promotional work, it will
be obvious from the above that the Jaipur
scheme has managed to achieve more or less the
same results, on a lesser scale, as the Ranchi
scheme. The environment for the’small-scale
firm is of course different in Rajasthan and this,
tog&her with the tradition of entrepreneurship
in the State, may have helped to compensate for
any disadvantages involved in not having all the
comrjonents of the Ranchi centre. More poten-
tial entrepreneurs could of course be helped
if government money was available to fund
a ‘nursery’ estate and to provide expensive
production-related machinery and more testing
equipment in the workshop. :i
The important point which emerges is that an
institute of scientific research has, on its own,
been able to accomplish a great deal in respect of
development and promotion of successful small
industries by ensuring that its research work is
strictly action-oriented and aimed at providing
new’ bpportunities for identified clients. The
common element found both here and at the
Ranchi centre is a permanent group of well-’
trained and interested staff under dedicated
leadership whos,e .major function is to assist
entrepr&i&rs .t-o _~develop technologies to thk
stage where they-form the basis for viable small-
scale industries and thereafter to provide tech-
nological assistance with product diversification
64
.I
I.
and testing facilities to help ensure maintenance
of quality. ,I, ::,
This is not a serqce which cn/6e effectively
rendered by siinply\,<providing central facility
worl&opsand ex,pe&ive development and test- _
ingequipment. TliFs&?ia~uman factor found
in the BISR centres is’phat is needed to make I
buildings and machines? work properly. This’
human element seems I$ have at least four
characteristics. First, th$,\ staff are very ‘well
q lified and capable of h&ly innovative R & D
wx rk. Second, they are &$uinely interested in ,l
seeing that the fruits of their ‘babour, in the form ’
of the technologies they develop, are used by
’ sm&ll entrepreneurs to create viable small indus-
tries; Third, there is a person’gl relationship
betw,een staff and entrepreneurs ,,because the
centres are small and cater for only a small
number of entrepreneurs at any one time.
Finally the staff are. less .likely to move around
than are employees in go,vernmen.t. establish-
ments; they put down robts and-kave a..lohg-
term interest in what they are doing.
FactorsMsuccdss -, and problems :’
The&is&3 doubtqt~the pervasive philosophy
of the staff is a very important element in the
style and effectiveness of SIRTDO’s work.
Without the drive and enthusiasm of t&iirall
group of people who conceived, developed and
implemented the model; it is doubtful whether
very much could have been achieved. Even with .
the same facilities and assistance measures, it Is
certain that the-outcome -wouldhave-been vety
different if the staff had regarded thei.r work as
just another job..
Philosophy
The philosophy is important enough to deserve a
special mention. It is basically built on” what the
staff call ‘the three C’s’: competence, con-
fidence and comprehension. They -believe that
enabling people to carry out their work compe-
tently is the best way to build up their confidence
to undertake further tasks by themselves. They
feeI it will also eventually lead to an under-
standing or comprehension about the way things
can be done to the benefit of society rather than
iust for personal gain. L ,, 4
The SIRTDO Gaff stress the impow
this characteristic of their’ scheme since_assis-
tance measures, elsewhere all-too-oftendestroy
the recipients’- self-confide&e by, making them
feel totally reliant~on the assisting agency. How-
, %ver, this is probably the most difficult aspect of
., rr
 the< scheme to replicate since it depends totally The Ranchi scheme shows
on the ability and sensitivity of the staff. to
.
provide assistance in the special SIRTDO way.
The Jaipur Centre has achieved a certain degree
of success in this respect, but t&undoubtedly assist with the
due to the fact th”at the Di’&tor was one20f the
group of BIT staff who origmally conceived of
tEentire scheme. It remains to be seen whether
A”
as much can be achieved along these lines
elsewhere. .

Design of technology tories and outside consultants where

The technologies on which the small units are 4s was seen, this was particularly us
based and the input of the BIT staff who have case of the metal-processing industries. It is thus
worked-on de’veloping them have played a m’ajor important to have staff who know wh,ere to go to
and entirely necessary part in the success of the findsupplementary R &-D capacity and to have
scheme. This input has enabled most of the funds to pay for this.
entrepreneurs to take_~ufarmore complicated
projects._than --~the-ordinary entrepeneur and Permanenf staff
undertake the production of the items beyond An important factor i”nthe succe& of the Ranchi
the capability of those with less direct access to R scheme has been the availability of the per-
& D facilities.’ The more sophisticated the tech- manent staff employed by BISR. It is difficult to
nology, the more likely it is that the firm has see how any scheme which lacks permanent staff
remained free from competition once a market could effectively promote more than a fe,w small
has been established. This was seen to be partic- scale units. As was seen, -the Jaipur Cen‘tre was
ularly true of a firm like Transgietz - and to a able to accomplish quite a lot through’having a
lesser extent Meditron - as opposed to firms like permanent ‘and enthusiastic staff - even though ‘x\\_ I
PIF which rely more on the marketing skills of the support of’s technical.institufe 8n.d govern- ‘\
the entrepreneur than on technological design to ment promotional funds were lacking. By corn-- I
I parison, the effective utilization of government
stay in business.
The R & D input represents a substantial funds provided to the engineering colleges in .
subsidy to many of the units, but this should be Bihar may well be hindered by the fact that no
looked at in light of the factchat: (a) the tech- provision has been made for the salaries of per-
e .’
nical institute’s facilities and staff time are manent staff.
probably better used on practical R & D rather Of course, not just any staff%vi.ll do. The
than purely academic work; (b) heavy.industry common element with the permanent staff in the
pays for some of the R & D workon products ‘Ranchi and Jaipur centres is that they are very ‘:r-
which it is interested in having develo’psd:“; and talented engineers and that, they are genuinely,
(c) ah small entrepreneu,rs-in the State are ih any interested in applyin their talent to helping
case supposed to have access to subsidized R &‘D other people to start up successful small indus-
facilities. tries.. In other wo’tds, providing salaries to pay
‘i ,for permanent staff is not enough. The people
who run schemes based on the Ranchi model
have to be both capable jnd enthusiastic. ‘r
’ This is strengthened by the fact that the entrepre-
neurs are talented engineers. A commercial entrepre-
Bank loans
neur may be able to buy R & D: it Ps less easy to buy in
a good engineer who will.devote as much care and
The wi!lingness of the United Commercial Bank
attention to the firm as the-owner himself. Ih any
to experiment with a change in its normal x ”
case, good engineers are reluctant to join small firms
lending procedures to small industries has been
. ..*l very important. Without the special agreement y
.-e , (‘espectally in‘rurafareas) because of supposed lack
/ of security, lack of prestige, low wages, etc. reached with the Bank, it is. likely that most of
’ In this case, the entrepreneur is not really subsidispd the entrepreneurs would have been financially ‘-
- he is merely paid (through SIRTDO) to carryou?d -incapable of starting a business of their own. As
& D work for the industry which will benefit from one of the entrepreneurs put it: ‘As a new
this work. ‘I graduate, with no experience and no money to Z ’
,P 3 ,._...->
65 ‘.,
_
 invest in a complicated venture myself, nq bank
manager would have given me the time ofPay if 1
~-~
had not be& ~pponsored%y~Sl~~DO.’ It would
seem to be an essential point to be considered by
any technical institute intending to launch new
graduates into small-sc,ale industry., It is encour-
aging that similar agreements are being worked
out betweerrunited Commercial Bank and IIT
Madras and several technical colleges in West
Bengal.
Admittedly, the Jaipur centre {has thrived
without the need fdr a special banking arrange-
ment, but conditions were different there. In
particular, the entrepreneurs already had some
bvork experience and some financial backing
behind them. In addition, the environment for
small-scale industrialization is very favourable
in Rajasthan - banks are less nervous about
lending *to small units and people are less
s nervous abou’t investing everything they have
in starting a new business ventture. If the& con-
ditions do not exist, a special banking arrange-
ment is obviously very importtint.
Marketing
All the SIRTDO entrepreneurs described how
the schem”e, had assisted them in acquiring
markets f‘or their products. In some cases, the
staff ensured [harthe products and technologies
related to market needs - surveys revealed that
,L there \vas a demand for a specific product or
large industries or government departments
approached BIT/SIRTDO about recemmend-
ing a small unit which, could produce a needed
commodity.
In other cases, where the er!trepre_ne.u!:ch.~sea_ &inan)t~f3i<
-product for which the market was less well estab-
lished, he normally found that acquiring orders
was easier by viitue of having ihe spdnsoring
agency’s name behind him. All the Iianchi entre-
preneurs utilize the fact that they are SI;,TD,O
- sponsored when competing for orders. Simi- etching equipment &hen double-sided br very
’ larly, all the Jaipur entrepreneurs advertise.the
fact that they are sponsored by BISR. This
system seems to work well because the customers
know thathere-are good -t-esting facilities and which ‘seems to ‘be more important than the
technical experts backing up a, SIRTDO/BISR
sponsored industry, and because experience has ment or commercial ientral facility centre would
shown that the products coming from such
industries are good va1u.e for money.
The Ranchi centre has succesded in acquiring
markets for iis entrepreneurs partly because of
being in the qidsl of a heavy industrial belt. As
was seen in Jaitiur’s case however, it is possible
.. s
‘to acquire good markets-&en if ,there are ‘no
large indu_s_trks in the immediate vicin‘t-y;-,, ~- .z-----~
< ..-
B, _--
i
~~d,itj; control and testingfaci/iti&
Quality control has been important both in
t erms of gaining and maintaining mar-
many df the entrepreneurs have been helped by
b eing able to use‘lhe testing facilities of the BIT
1a b Qratories. The main point to e”mphasise here
i$ that the benefit lies in having easy and quick
&~ess to t’&t&?lgfacilities rather than the fact
Bthat they are !availa.b!e free or at a nominal
,charge.lVarious testing facilities are available at
isubsidised rate4 throughout the country for the
use of all small ent!epieneurg (see page 7). How-
‘ ever,- these are i&ariably located at some dis-” ,
tance $nd delays:aye experienced in complying
with bureaucratit procedures- and in receiving X’.-
test results. This can,be a cause of great concern
for an’ eptrepreneur who ~has a product WhiTh T
needs a ‘quality control’ certificate for every
batch or evety item.
As WASseen, while-%ost of the ,rnechan&al- ’
and electronic-based entrepreneuis remarked on i
the, usefulness of having a’ccess to convenient
testing @cilitiesj the chemical-based industries
such as Bihar Drugs have ‘experiency$. diffi- “1
culties because of -the lack of such faclhtiesi? ~~- i
Bihar: This should be rectified when the new /
SIRTDO Pharmaceutical Testing Centre is ~ !..
built. 7 P
/
Central Service Facilihes
In the same way, SIRTDO,‘s central servicefacil-
ities have b~eenan import&&etor in the success
firnis. Firms such as PIF use
these facilities to augment their own machinery
when large orders are. being undertaken. The
metal-processing firms frequently utilize the
central facility for making and repairing dies.
The electronic firmi?utilize the central ,photo-
high quality printed circuit boards are required.
Pngai,n, although these services are available
at a ve;y low cost, it is the convenience factor
’
price. To have war.k done in a normal govern-
take much longer and would often result in
Calcutta to have the &es made for transmission with the help of a partn~er) is no easy matter .--
clamps. - they are marketing manager, bill collector,
By comparison, facilities in the SIRTDO’ financial adviser i ‘3hief designer, personnel _
central workshop are put at the disposal of a manager and production manager all rslled.into
SlRTDO entrepreneur almost immediately on one: a never-ending list of&nctions which make
requez&Al-so~thestaffi-n the workshop try their up the daily routine of a small entrepreneur;. Not \!
hardest to do their best for the entrepreneurs everyone could cope*‘tii$h ,this type-of existence
- whether this means working very hard and and it is easy to see, why most- engineering grad- \$ ;,yj
working overtime to help finish orders onTime, uates- still prefer the ease of a paid job. The \,
or applying their skill to produce high quality SIRTDO entrepreneurs-however tend to see this
dies. Entrepreneurs do hot get this sort of special as a challenge and, with the c’oerstant-support-bf- _._
treatment in outside centres. _ the SIRTDO staff; tackle each setba+k”with’ ,*I
enthusiasm. This enthusiasm must affect the
Moral support a$ guidance ’ BIQtudents who can hardly be unaware of th,e
Most of the entrepreneurs mentioned the value dynam’icmof people. tinning industri,es -- ’ ‘1.
of having the constant support and guidance of right on their dooww the new gengra- ‘:
-tion becomes conditioned at an-early;-stagein its_ i
the SIRTDO staff during their early, diffimlt 1 R
education. //<- I
years. This aspect of the scheme should not be pli---
overlooked;?fZxtremely importa-nt when deal- The qualities of the entrepreneur~ha?e ’ -
-- --obviously played-n- important ,pafi73-in: the --
ing with new graduateswho have no commerXa1
experience and ‘who are unused to ‘taking risks scheme and, to a certain extent: this must be
and making major decisions. attributed to the careful scre$ing process which ._ ..- .~
Similarly, the amount of time and energy- thestaff iriiplement before giving sponsorship to ,f
involved in discussing problems wi$h the entre- an entrepreneur.
pieneurs, working through decisions, ’ and
weighing up probabilities of certain actions Some problems ’
succeeding should not be underestimated. If No scheme is tiit,hout,,its weaknesses and failu’res :
the staff had insisted on keeping to strict.work- and it is appropriate to point out some of those ..
ing hours rather t\han becoming totally involved involved in the ‘SfRTDO scheme. ph.;* ,
in the scheme, many decisions would have First, many qf the entrepre~sseerh to be \ ,
remained unmade and much less would have reluctant to leave the%=mrseiy~ estate. As%en- it 4
been achieved in respect of entrepreneurial- _tioned e$ier, only three entrepreneurs have
developtnent. ‘One of the points the SIRTDO actually moved off on their own, even though 2’
scheme brings out most clearly is that training there %re many more who seem to be capable 2
people to become entrepreneurs and giving them enough of operating independently of the 4
the confidence to take risks is a very people- scheme. The entrepreneurs gave .a variety of
intensive business. reasons for thit. There.is the direct cost involved
in moving to another/location. This was men-
The entrepreneurs tioned particularly ‘by the, heavier electro- n ,r’
A s,rheme for entrepreneufiial hnd smallindustry mechanical ,and metal-processing firms where ,: :
development will, of course, be of little use if the installation costs account for about 20% of total
basic ‘raw material’ - the potential entrepre- fixed investment <costs. -The indirect costs :
invo n closing:down. pro&ction during’the
neur - does not possess the necessary qualities of
mov also m.entioned by several entrepre- ~-
intelligence, skill, enthusiasm_ and cormnon
nkur eing a restraining factor.
sense upon which the scheme can build. X\_j, f the entrepreneurs said they needed to
There can be no denying that the SIRTDO stay by so’a&to be able. to make fulluse of
entrepreneurs possess these qualities. They are the testing.equibmerit and central’facility work-
certainly very diTferent from’ the ordinary com- shop. In thiscase, the restraining factor w,as said
mercial entrepreneur - an+ when .talking . . . to to be the lack of a suitable nearby site ori which __
them, one gets a sense OI people particrpatmg In to sb,uild a new factor+ Same of, the entrepre- - 2
an exciting experiment rat,her than in running,a neurs, inc uding the owners of PIF, Meditron
business. I and Pr,ecis‘ion Found have in fact purchased-
Their ability for hard ti,ork is outstanding. \
some,land nearby:.T <are, howeSer, reluctant
ai-
Running a small industry siqgle handed (or even to proceed v&ith building new factories until the
l ”

\:
N /
 government has- installed a roab, water and posed for government consideration and imple-‘q, -
power- connections and other necessary infra- mentation. .’ 7.
.
structure. S‘ At a general level, the,SIRTDO staff are often 3
--- ‘. Also, some of the entrepreneurs (such as the asked to present evidence (based on the expe$ ,:A,~’
owner of ‘Bihar Drugs) ‘although independent‘ ence of their own units) to various committeq- t-i.*
enough at the current scale of operation, have evaluating policy measures at the State and
continued to cling ro the scheme because they Central Government level. Through this mecha-
needed it to get further financial backing with- nism, they can have an influence on the general
out collateral. * 3 environment under which their own units and
Owing to the continued occupation of the other small industries in Bihar and the rest of .I
sheds by the existing entrepreneurs, there are India operate. For instance, it was the evidence
currently no \‘acant sheds in which to locate new of the SIRTDO staff which helped’to increase
-2BI-f graduates seeking SIRTDO sponsorship. the power subsi,dy for small indtist‘rie&s,.l
, Construction of some new sheds on:thLnursery’ ---~-Thefina-l problem relates t,o the implicati,ons ---
estate is of course progressing: and if the full of expansion of the scheme,dIRTDO’s strength
expansion plans of eighty ‘nursery’ sheds ‘are comes mainly from thc,,&put of the five BIT.
realized, this should solve locationproblems for staff members with back-up from the.permanent
the immediate future. However, it seems that staff provided by dSR. Despite the fact that
the process of moving entrepreneurs fro 1 the the scheme has,Xiiw been operating .far rnmy. 2.
‘nursery’ stage tothe ‘self-tiant’stage --could
7 be years, very f,& of-the ‘other BIT staff members
examined rather more closely to see if it can be have exF&sed arty%interest in becoming fully
”
improi ed. involyzd on acontinuing basis. With no heIp
‘Another problem is that SIRTDO entrepre- L fro.mthts source, it<would have been difficult for
neurs still often experience enormous difficulj&s ,,$e staff to cope with expansion even to the
in respect of power cuts, acquisition of raw/ present level if it had-not been for the willingness ~-
materials, extension of cash credit limits and&& *of earlier entrepreneurs to provide gu%Iance and
II
payment of bills, These arc, of‘course, thc’sorr help to new entrepreneurs:
of problems w.hich have led to the closure of Obvious questions arise about the ability of _
many small industries in Bihar,, and although the existing staff to cope with the proposed
SIRTDO may not ha\e found a way of elimi- expanded total of eighty entrepreneurs (even if
naring such problems, it has perhaps enabled its existing entrepreneurs .da help:.out’). The State
entrepreneurs to operate at a profit in spite of Government has been asked to create some per-
them. manent- posts at SIRTDO and these will certainly
The SIRTDO staff are of course very be needed. However, it will be interesting to see
conscious of t*hese,problems but do not want to whether the quality of entrepreneurs remains the
get too invol\,ed since they feel that this would same once the ratio of entrepreneurs to core
defeat the purpose of training the entrepreneurs staff is further increased. *
to SOILYtheir own problems rather than expec-
ting other peopleto do P\,erything for them. On
the other hand, for the purpose of showinfiow
\ a well-integrated scheme can lead to successful
small industry development, the staff are-
obviously int+erested in trying to work out how
changes m policy and/or small industry assis-
tance measures could help to alleviate such
problems for the small-scale sector as a whole.
With this end in mind, various schemes are being
given consideration for implementation by -
SIRTDQ or the government. For example,
much time and effort hasbeen‘put into looking
-at the-various advantages and disadvantages of
SIRTDO purchasing its own generator for the
‘nursery’ estate to combat power cu~.s. In addi- ’ From an eco’homic analysis of the SIRTDO units, it
tion, various measures which would improve had been proved that it was*difficult to be econo-
the raw material supply problem are being pro- mically viable with the lesser rate of subsidy.,
* -.

3
,f
1 ..4
6 ANAPPR~ACHT~~URAL
INDUSTRIALIZAT.IQN'A"I@
RURALDEVELOPMENT
?,’ Introduction
b -plant
Given the objectives of the small ..industry
scheme and the prevailing philosophy behind
it, it should come as no surprise to find .that#r+&~~
,;~-..--.-“-~-~~~*~~~~~~~v~~~~~~~~~~~~~
trialization and rural.deveIo.pmeni.
This side of SIRTDO’s-work started when one
-, or two of the core BIT staff decided that the
objective of showing how to utilize the existing
facilities,, staff and,students of-BIT to heIp the
sur&rounding aria could be extended beyond the
limits of small-scale industry develo’pment.
Thus, they embarked on the process of develop-,
ing technologies which could enable people in
nearby villages to improve-their incomes and
standard of living without seeking an external
job. The rural development programme is also _1
very much concernedwith building up the confi-
dence which people have in their ability to do
things for themselves..
. l The main focus of the present study was the
p examples of how it is actually being put into-
small industry scheme. However, this chapter on
rural industrialization and development has
been included both because it relates to the small
industries and because the work is so potentially
important in its own.right.
Kural industries
Oil ex;raclion * first level lac processing’ - has been aimed more;
The first rural development prop&t to%e ini-
tiated was based on the cultivation of medicinal
and oil-bearing plants and the extraction of
essential oils. Investigations revealed that many
villagers in the area had spare land on which
food crops could not be grown without irriga-
tion and had spare time to devote to&y activity
making use of this land. They did not, however,
have access to any technology or skills whi,ch
they could utilize to eaL~~f,tbis.-
ogramme started with the experi-
-, mentaf’ntibn-irrigated ‘cultivation of more than
* 100 plant species of medicinal value of which
12 were found to be suitable for the Chota
Nagpur region. Following, comOmercialI trials,
,’
,
: .
many neighbpuring farmers were trained <n the
I
cuhivation of these plants and marketing facili-
ties were created for them. i
SIRTDO’s involvement did not stop here. it
was found that,farmers who had taken a cart-
load of plants to the market would se11the whole ’
lot for Rs 20 - I$s 30 towards the end of the day
if it looked as if t’he only aIterna&e was going to
be to take it batk home again. To solve this
problem, SIRTDO developed a small distillation
(costing about Rs 2,000) fo_r village-use-
This meant that the farmer now only had‘ to
carry a bottle+of tiquid which wouI&sell for Rs
j&++$@&&-.f+&&~~ --
urifying, at least some of the processing ;ouId
Ee done in the village, thus raising income levels. ‘\:,
About a dozen distillation plants have been sold
so. far.
StiII not satisfied, SIRTDO is now trying to
make the whole production process completely
ru.raI by encouraging the instaI!ation of small ’ ,’
solvent,..extraction plants in small townships so’
that the oil received from farmers does not have
to g~3 to large mdustries in the bJg cities for
further processing. A pilot .ptant in the price r
range of,Rs 1 lakh to_Rs I .5 lakhs has beendevel- _ :
oped, an’d aa small-scale unit sponsored by
SIRTDO will be the first firm toexperiment with
this idea. Thidort of integrated planning is
often talked about, but this is one,of very few c’
practice. -
Lac processing
While the essential oils project has introduced an
entirely .new activity in the villages, one .of
SIRTDO’s other rural developmem projects -
that based on the development of technology for
at improving traditional technology8 and raising
skill levels in an existing income-generating
activity. 3
A major share (about 20%) of the worid’s lac
production comes from a small area of the
Ranchi district. ,Lac is~Ahe secretion of small D
insects which live,in the-forests in thisarea, and it
is the basic raw material used-in making lacquers
of all types. Villagers in the area have col’lected
the branches -_- on wbjch the secret&$ is,,.found, ~..
m lap,.’lrom me surtace .and “Id the
,.’ 2
d
’ Laghas several uses. It is used in‘furniture polishing,
floor finishing, electric;1 installatio:, varnishes,
gram,ophone records and in printing ink. . .
i’ * 3, I ‘j. ,/r-l:
/’ ,”
70 * ., ’
~ ,I-‘.
res’ulting ‘stick’lac’ to small and medium indus-
tries in the nearby townships. Further processing
is carried out by theseHfirms, and they send ‘seed
lac’ to Calcutta and overseas where it is used in
the manufacture of final products. ”I
SIRTDO discovered that although the price
for seed lac was fairly constant &.about Rs 6 per
kg, the price paid to the villagers for stick lac was
variable and often far below the Government
fised loweSt price of Rs 2 per kg. It was con-
cluded that the villagers could be helped coqsid-.
erably if they were given the, technology and
tfaining for- converting stick lac. . to seed lac in
rtWWoW~vI I1ages .
After in\,estigatihg the technology used in the
protessing factories in nearby townshitis, it was
decided that..the most efficient results could be
achieved through the use of< a hand-operat$d
crusher, followed, by manual cleaning. A village
within the tribal lac-growing district as selected
to be the location of a training-cum-pYud uction
centre, kvith the I‘and and well water being,pro-
\,ided by the \ illage head. A factory from outside
the immediate area agreed to supply trainers and
an old broken hand-operated brushing machine
ivhich was easily repaired by SIRTDO staff. The
for use during training.
The rechnology which was introduced is as
follo~vs. The stick lac is repeatediy crushed in the
hand machine and rhen sieved until till the lac is
t&en out. The crushed lac is then put in cleaning
pirs - about 20 kg at a time - and repeatedly
cleaned lvith water. The dirty water is strdined
through a cloth and the fine powder collected. on
the cloth Wept separately. Caustic soda is used
for finishing the cleaning operation and to
obratn a shining colour. The. fine dust collecied
from straining the dirty water is dried, crushed
and further clea‘ned since this can also be sold as
‘dust lac’. The crust left over after the wasLe
\v.ater dries in the cleaning pits is found to form a
very powerful manure. This is used by the village
head in return for use of his land and well water.
About tweri’ty people have been, trained so far
and now produce seed l-ac on the equipmevt in
the training-cum-production centre, Interest-
ingly, the cost of the entire centre plus all
e%penses for th’e firsr‘ training _. tour*
-1 of ten -
people was only ‘Rs 3,343. -About two-thx<‘Iif
this cost ivas recouped by sellin@he seed lac pro-
duced during the training course.
Rural artisan trainhig
At a slightly different I&el, SIRTDO has been
71
involved in the preparation’of training modules *
for use in tcaining programmes aimed at Ural 1
youths. This started with a request by the Chota
Nagpur Catholic Cooperative Society to.develop
modules for use in Ijumpset mechanic courses
and cycle mechanic-cum-fitter courses. Tphe firsi
courses were carried out in a specially allocated. ’
building on \h?SIRTDO site while the methods
and modules were being perfected. After the ’ .
fifth course. the responsibilityi for training was ’
hahded over’ to %CCS and the courses are pqw
cariied out at the Society’s Agricul&al Train-
ing Centre at Namkdm, which is just outside,
:
RAnchi town.
AJ1
3
Pump-set and cycle mechanics
Each of these coursei lasts thiee month; and -_
after this each trainee is given a tool kit valued at
abobt Rs 250 with which to-start up his own’
service industry in his village.’ Abotit 140 cycle-
cum-fitter mechanics have now beeri trained of
whom an estimated 70% are thought’ to be
engaged in profitable self-employment. Tl~esri;--~~ --. -~~
mated grossincoQe of these fitters is currently in .
the region of Rs’3,OOO p’es: annum. About 76
pumpset mechanics haveyb{en trained of whom
in maintenance and repair/of pumpsets in their
own areas. (Many of the others took up paid ‘I
employment as semi-skilled workers after th$r
8
training.
One of the p;ot$ems which is now beingfa d d .I
by this valuable programme is the rising price of
hand tools. SIRTDO feels’it is important to keep
the price of a tool kit in line with expected annual
earnings and savings in the rural areas. Investi- ;
gations at village level revealed, that any sum of
money much in exce& of the amount an average
family couldexpect to sa$n a year (Rs 200) was
completely outside the range of comprehension.
The staff of SIRTDO belie$e that if a scheme to
create self-employment in a village is to work;it
mtist be based on a capital investment which is ”
ivithin the range of comprehension.’
-y/--- -~-
As a way of overcoming this --prdbiem,
SIRTDO hopes to acquireits own die-making :
and copying machine’s0 that it an give dies to
? This indeed m&y well be the case since this scheme
appears to be working while’s0 many schemes else-
where in the world which have been based on far
more expensive tool kits given out by well-meaning)
donor agencies hav.e failed.
 .

I ,-
!
small-scale industries which it would sponsor for Tasamearing and silk reeling, /. -t.
the making of ha@ tools. Having given the‘firm The remaining area in which&RTDO has devel- :‘-
a die free of charge, it wouId ask for a certain oped train&g modules is ‘thdt of fasar reari. g
1
percentage of the tools made from the die to be and silk reeling and spinning. SlRTDO- took tip
given back at a reduced cost. The firm would this programme, at the request of the Centiat :
then be free..toseh the-rest-.of the hand tools Tasar ResearchStation (part of the Centi’al-Silk
made from the die at the market prices and Board) which.is located in Ranchi a& whiich
SlRTDO would supply the hand tools to the provides the staff for carrying out the%rainihg of
rural development training programmes at a low rural artisans in the purpose-built sericulture *
price. shed near the43RTDO building. The .pio-
gramme aims to give training to marginal
Work experience prograrnrne ’ farmers and villagers in the scientific method of ,
An important offshoot of this particular pro- planting Arjun and Asan plants, the reapingof. 0
gramme has been the work SIRTDO has been silk moth cocoons, a?rd the reeling and spi’nnjng~ -
doing,on the development of training. modules of silk.
foil use in elementary technical training for boys The idea of the programme is that those small 1.
in secondary schools in rural areas. When tht and marginal farmers who have land not suited.---,,-.
Work Experience Programme was intrqduced for food crops could grow Arj&n and Asan
for schools in 1979, the heads of3ome of the mis- plants .and start rearing-‘cocoon<‘. They, could
sionary schools in the District who had heard
about the training modules. for rural youths
approached-SIRTDO about the -possibility of
using thesemodules toassist in the training of
their senior pupilsduring the forty hours of the
school year which were to be set asid.e for work
related activities. trained in tasar rearing (which is a thr
SIRTDO felt that the esisting modules would
be unsuited to this purpose, but believed that a six month ~
real gap did esist in respect of appropriate tech-
nical training for this level of pupil. As a con-
sequence, SIRTDO has now deviloped training
modules which are being tried out in two rueal
secondary schools. Training is spread over the Technologic$l developments worthy of
last three years of schooling pnd there is a mention in this sert.Lulture programme are as
distinct module for each year. me first involv.es follows. First., Jn respect of actual rearing of
the identification of materjals, hand tools, and tasar, improvements on the traditional practices
their uses and simple measurements; the second have included learning the appropriate time to
involves the making of simple items such as watch for and scare off birds, physically shifting
mugs from tin plate; and the third is trade worms from one plant to another so asto ensure,
specific. This appears to:be working very well an adequate food supply, and learning how to
and will, it is hoped, come into use in many other spot diseased worms so that they can be removed
rural secondary schools in-the State; and destroyed before the whole ‘crop is lost. ’
So much interest khas been generated in the Second, growers are now supplied with’disease-
area around the schools which are currently .free layers (DFL’s). These are secured from’the
using the modules that the teachers have. now SLRTDO sericulture centre and are the cocoons
‘\

‘.
asked SIRTDO if it would be possible to develop
further modules for the training of school drop-
outs and village youths in generaL. These would
- be for, &use&r, c-ourses to. be .&on&
&rloUt compounct I? the evenings.’
2 When the female butterfly has laid her eggs (500 i,$a
’ Hand tool requirements will be very great for this
type of programme and increase the strength om
argument mentiotied on the previous page.
hatched from the egg! of a disease-free butter-
fly.? The cocoons ,are-@red in t@e sericulture ’
shed at SIRTDO which has certain architectural .
,x4
batch) she is destroyed and i,xispected under laboia-
tory conditions to check for signs of diseasg.tIf.&o i
disease is found, the eggyare retained for storage, -s.-Yy
hafehing and cJistributioii. 1 ‘.
 4
R /
-1
/
features designed to keep the cocodns cool since. which is,so *often overlooked when trying to dis-
they die atjhigh temperatures. The roof of the $3sll
, I .n& so-called _approptiate technologies.
1_--. ~~~..
, z ..-- ~- -.
building i&m&de of country tiles and simply
washing the concrete floor in the summer create; Low-cost building rhaterials .
an’ adequate cooling effecr in the building Also in the*Tcivil engineering field, -mention 1
through evaporation. Third, improved equip-” should be made of the work being done by the :
ment for reeling and spinning has been developed BIT civil engineering department in developing
by CTRS,,with SIRTDO providing modifica- low-c& building materials for rural develop-
tions frqm time to time aszeedgd. ment. This is partictilarl$ important at a time i
Then an ?ctite $.hortage of cement and a continu-
Rural development 1 o;us rise in tee price of bufid,ing materials
rftiuced the pace of devclopniept - 1”
~jl
At still another level &z those technologies
-such as small irrigation cJams+and low cost build- the rural areas.
ing -materials ivhich have be& d$veloped by
-SIRTDO 10 meet the needs of people in the rural
&reas. c_ . 3-

In Ihe c&e of iriigation dams, it was found ihat ent but has a longer curing time.’ It is dalcu-
-zr.A
villagers \<ere already building their own earth lated that small-scale unitq, based on this process ,,;‘+c
dams. These Gsere frequently carried away. by can be eco’nomically viable even with prddticti@ :
flash tloods or silted up and often .breached by rates-as low as one tonne’per day, and so can be, . .. ..
thg farmers themsel\,es in order to protect their located throughout the rural areas. The-depart- .% I ‘1-
fields. N’har was needed was.3 dam which would ment’ ‘as also developed low-cost bricks using : * ‘.
7
let through silt and heavy flows of water at tlie rice husk. These ,>donot require firing and.ca6
beginning of rhe monsoon bur collect sufficient e at a cost 20% - 30% lower than, con- .
water tmvards the end of the monsoon to allow al bricks.? Corrugated roofing sheets
for ivinter iriigation. Existing. atechnologies using waste products such
in\,ol\eda good deal of expense and the use of coconut fibres. These, it -- -
materials and skills’ not commonly found in the strong as $albestos sheets
<l > ,glthough che?per and heavier. All these techno-.
villages.
.4n arch foundation dam was designed which logies, beside helping to improve conditioiis in :
fulfilled all requirements. It made pse of< local rural areas .by provi$ipg lower, ‘c st building
mar~eiials and a\,ailable rural skills; it required materials, also promise to create a 1 rger “timber
no .rnachin+ry other than normal agricultural of jobs through manufacture in sm II scale units
tools; the consiruction met-hod was simple so as throughout the rural areas. f
i
to de~,elop confidence among the villrigers; and
the cost of construction was in the range‘of a few Future dhections a
hundred to a fev thousand rupees depending on It is interesting to note that, SIRTDO’s planned
the size of the area to be irrigated. Two dams future projects and pqogrammes are focused
were successful.ly completed under SlRTDO’s more on rural developmeqt than they have been
. in the past. Developments/in existing fields such
guidance and supervisiofl, and, encou.r,agmgly,
the villagers in the surrouhding areas have now )as mechanical epgineering/an$electronidcontrol
built a number of si,milar dams on their own. are becoming more’concer.ned with s&vipg rural
This last poinr is Gtrem$y important siqce it and ,agricu!tarat nekds or with splitting up the
is [he proof that this was a Eiuiy apflopriate, production zprocess*so ih$;a large numberbof” I .
technology which was introduced-in an appro- $afiities can be paid to d6 world in their own
]kMe~ ised c,the /;‘h.omesyn the viWages. At the same
importance of keeping the ‘methaq simm
enough for the v.iIlagers to grasp quicklend the,
importance of invblli,ng dhem fully in the b,uild-1:
da_ys..
ing of the firr_sL
damsso rhary-wereconfitf,r& Z hie ~~p~eg~~~rengtk~~omparahle &L.QXQIICL
I enough to do on’ to making more dams withob( ; class fired bricks and wafer abzorption‘is less than
the need for external assistance. This is the point ,%j5%. 1-1 ,, I l a :
\
3 /
 P6 \ ” ,

:
,
-.
< I

“newer ‘fields being expanded, such ‘as agro- by [*heMechanical Engineering Department are
processing and c?vil construction, are, by those relating to solar energy. The most ~.JQ,@s- -~
narure, rurally oriented. ing of these is the small solar water ,eat& wh@t~-\_
i v
is currently being tested for accebtability and .’
’ L o w-COSI fjarm vehicle utility in a few rural dispensaries. If, this proves
In the mechanical engineering field, one of the satisfactory, then the Ministry of Health is likely ,
most interesting developments is that of a low to place orders to supply every dispensary in the
cost farm v,ehicle. The stafting point for this State.
project was a consuitancy ‘carried out by Other solacprojects whichcould prove appro-
SIRTDO st.aff to evaluate an OXFAM-funded priate for rural use are a solar still which gives
pump-set project. It was discovered that the ten litres of distilled- water per day abd costs
v.illagers to k*hom diesel pump-sets had been dis- Rs 300; a simple solar pump which, pum$<Z cm3
tributed felt that they should’Obe able to make of water per second; and )a’solar drier $or pre- ’
more use of a valuable piece of machinery (espe- servation of surplus fruits andvegetables in the
cially the engine) which was only being ui‘ilized villages. $1 i
for about four.hours a day for irrigatibn pur-
poses.’ The various ways in which an engine Deem tralized jvoduction of electronic
could be used to meet felt needs in the villages components \ I’
\vere considered and it was d ided that the most In the electronics field, the ways in which elec- ’
’ useful thing for it to do i nf‘tially would be to tronic componelrhs could be produced by large
power a simple farm vehicle. An old chassis was numbers of people i’n their own homes in the
purchased from a scrap yard: and the diesel villages are being examined. This is’largely a
engine fitted. After som’e modifications to the problem of training, organisation and manage-
,pear box and other_ parts of%the vehicle, it was ment, combined wihh a technology appropriate
found that the whole thing worked quite well.’ to the task in hand. This idea grew out of . -
The first prototJ’pe is currently being tried out 1 observations by the BIT staff theuneducated \\,
in some nei@bouring villages by farmers using it’ and unskilled workers.in Go of the SIRTDO ’
to transport their crops. Once technical perfor- units (tieditron and PCB House)‘ha?L been abTe
mance is prov.ed satisfactory, SIRTDO wil-! I to pick up quite intricste tasks (such as asgem-
proteed to identify an entrepreneur who can bling printed circuit. boards) after only a few
3tarr manufacturing these simple vehicles. SiItce days training; and as long as the task demanded
there are approximately, 5,000 pump-sets in the of them did not vary, they could continue work- -’ ’
neighbourhood, .there should be no lack’of sing with a minimum of supervision; It was
demand for this product. To make it aneven decided therefore that instead, of thinking only @
more attractive proposition, R & D work is now in terms of more electronic units organised ‘on
proceeding. in the Mechanical Engineering existing lines, it might prove more appropriate
Department of BIT vvith respect to developing a to try outjunits organ&d on the principle of dis- ’
suitable small plough which can be attached to tributive management. ’ 1
the vehicle for plough*jng small plots of land. 1’ This needs some explanation. The existing
SIRTDO will also- be developing a training units could be said to be organised on a ten- .,
mod@ for maintenance and *repair of these tralised management basi-s whereby aJ1 work is
-1,ehicles. This will probably be integrated with carried out under supervision in one place and c -
the existing three month training course for all workers are trained by the-w&manager--
pump-set mechanics. This sounds like a very after they have been employed.,The only-way to
\vell thought-out an.d useful programme and it expand in such units is to employ and train more
will be interesting to see how it works ougin workers
. ~- and. expand
. the physical
_ size. of opera-
[tons. Itl. this .proce.ss goes on for long enough,
- J.. ;y,,,q a - ‘the sheer size of the workforce and the manage- :‘j
2-sk. /g& ‘-=2!
/ ment problems involved (not to mention the . .
-*a*+dces 4 ,- ;%
kAhrrL&iycts &ing^ ,yndertaken economic .considerations) will start to dictate
rationalisat-ion’.of. p’rodliCtidn-i.n..favou~,of,mo.re,
i~~~?~;- LSF..
\f-~W$dea for this &se automation - a process which’will then displace‘ ---
those workers who ‘have been trained to deal
-.with the techniquis of manual production.
‘+ The new small-scale units,hould . have a differ- *

1 f
.
.’ II

7’
‘5 . -+
( ,
/
I ”
/

ent basis for production. By and large the L 0 w-cost hoking

pattern would be similar to the one which exists The Low Cost Materiais Development and 1
between the manufacturing giants ,such as -Research Cell’ is continui-@with i.ts work on
TE’LCO a-r& their small-scale ancillary units. In reducing the cost of the main components‘in a
this case it would be a small-scale unit which is buildjng-- roofing, bricks and cementitious . .
distributing orders for .different components materials. The basis for all technological devel- * 5
and. these would be produced by individual opments is that commercial units-set up to
families using their own machinery in their own produce these products must be ‘small-scale, _
homes. R 8: D work is already progressing in the rural-based, and should utilise local resources ; ,
electronics department of BIT to identify the and a minimum of power.
different components which could be made A recent request from the State Government 1’
(after very little training) using a simple manual to SlRTDO has been for assistance with the
press. The mechanical engineering department building of 200 government low-cost dwellings
of BIT will then do the research work on the dies for tribals and harijans within a low and fixed
and simple presses for producing the various budget. If SIRTDO can deal with this success- _
components. W’hen the equipment is technically .;_fully, there would seem to be endless possibilities
satisfactory, SlRTDO will develop modules for F for gaining work in low-cost government hous-
training villagers how to make various ‘co&- ing schemes of this type, and therefore a go@
ponenrs and will give each trained person their market for any entrepreneur wishing to start a
-own press. This vvill be done through the Rural small scale business producing low-cost building
Artisan Programme. Once sufficient numbers materials. *
.
of people ha\,e been trained, small-scale elec- t *
tronic industries will be sponsored by SlRTDO Agro-prkessing equipment
to provide a market for all the different co,m- With respect to work.on agro-processing, deveil
ponenrs capable of being made in the surround- opments relate mainly to requests for assistance ’
ing villages. ‘These industries will employ a comirrg from people in the surrounding v,illages: 4
number of ‘agbnts! who will travel to the villages Tech.nologies include a bullock-powered trac- ,~
to distribute raw materials and to collect and pay ‘ior; solar. crop driers; ferro-cement storage
for finished components. These will then be bins; extrusio$n cookers; vegetable preservation
collected together in the small-scale unit ‘for methods (e.g., spray drying’); and manually , ”
assembly into the final product. operated post--harvesting equipment for break:
This of course is a variation of similar schemes ing, winnowing and grinding pulses. _
which hav,e been tried elsewhere. One of the I ’
major problems with existing schemes has been SUMMARY 2 I-
that of identifying appropriate patterns of Since the work of the permanent staff and mos ,
ownership and control for commercial opera- of the BlSR and government f’bnds are limited . ti -
rionj. In m .t cases, control has either been in the development and prornoti 1n of small-scale ,
the hands of entrepreneurs, who have tended to industries, many of. the, acco n-7plishments in the -,
esploir t e people whom “the technologies are rural development field have been achieved ’
1. intende L -‘to benefit, or government has con- largely through -the interest and hard work of a
rrollet werations and the necessary ent-repre- few of the core’BlT staff. There are to date no
neurial approach ,to production and marketing specific plans of either BISR or the Government , z
has been lacking, It will be interesting to see if to give institutional sup&r-t to this side of the ;
;’ the SJRTDO scheme, relying on its own parEiC- programme ,and withou?iLiZs-i% unlikely that ~~-
.ular brand of ‘non-exploitative’ entrepreneur- much more can be accomplished. This would be ’
ship, can succeed where others have failed. disappointing, for it is obvious that the rural
Finally, the two newer areas of StRTDO’s develop,ment activities have a great* deal .of 1
work - low cost building and agro-processing potential in terms of jmproving rural incomes .
- by being based on raw materials which are a’nd living-standards in the region.
L
found. throughout
..- the rural; areas are particy- _.P., _ _ .,.;.. . _. .-+..n .-.._.-.”
“.----Ae...--*- ---
larly appropriate in terms of,small-scale, decen- e
’ The Cell is.located i’n the Civil Engin$ering Depart- ;
tralised ind-ustrialization. . ment of l$T. ‘% j:. 1 5.
i .
 .
1”
CONCLUSIO-NS , perman,ent staff who are interested ia practical
-_ A’
-i
,4t ‘thi risk of being repetitive,.-lt is worth high-
ligtitmg the main characteristics’of the Ranchi
sch&rre and discussing the more important
lessons vvhic$ are to be learned from it.
--The first’and ‘most important point relates to
the small group@ BIT staff who have been
responsible’for the development and implemen-
tation of the scheme. The philosophy behind
thei+approach and. the, time and effort inve.sted
by them ahd the scheme’s permanent tedhnical
personneLare.~the basis Upon which everything
else rests.?khe SlRTDO story s’howshow~murh
can be achie\.ed *by a small core group of
genuinely interested ‘peode whohave the right
sort of attitude toivar’ds development. * chjmodel
Secwnd, the scheme illust’rates how engineer-.
ing graduates can be motivated to start small
businesses and how they can be trained to
acquiae entrepreneurial talents. The point which
comes ot er clearly, is that this cannot be done by
means of,s short, theoretical.training course. It
i5 a lengthy process I+hich can fake up to five
!,ears’ and. lvhiih involv,es creating the sort of
en~irdnmenr in Mhi,ch the trainee Feels sectqe
enough to leaIn by doing.
8 Third, the Ranchi model illustrates. how a
\ ariety of agencies (in ihis$ase,, a technical insti-
tute, an institurt: of scientific research, a com-
.- mercial bank and-the industries department of
the State Government) can ,work effectively
2 .’, ” together Jowards the common objective of
‘:
developing and supporting smail jndusrries.
Under the specific oonditions existmg in the
Ranchi area, the inputsof all the2q$tgencies were
necessary .to make, the scheme .wdrk properly.;
. Under dif$erent (and more% favourable) condo-
. .“Iions, one or mare of,thc%%agenci‘esmay not be
s needed. This is well illustrated by theexample of
the Jaipur Centre which involves only an’ insti-
,
tute of scientific research arid has accomplished ..
a great deal without being integrated with a t-&h-
,. nical institute, a bank or a government depart-
ument. The main lesson to be learned is that the
key component of the model is a core group of
industrial researeh and who are willing to apply ,
their skills and energies to support small entre-
preneurs. This would seem to be an important -.
point to remember when thinking of trying to
implement similar schemes in other locations.
Fourth, with regard to the issue of replicabi-
lity, the Ranchi scheme demonstrates that once a l
good idea; tias been proved viable in ‘practice,
interest will be generated in trying to do the same ’
thing elsewhere. To date, this has led to: The jl
Bihar; $$vernment trying out similar schemes ini
all the engineering colleges in the State, theUtt,ar ,.,
Pradesh Government -offering support to the-i-+---
B.lSR Centre in:Allahabad; the, United Corn-
-merGtl~ Bank encouraging technical Oinstit.utes
in West-Bengal and elsewhere to copy the Ran-
SQ t.hat its job o.f lending to small
t --industries is -facilit&ed; and governments from
$ountrieS outside of India asking for advice and
assistance iri starting similar schemes. The first
location outside India to which the’ model is -’
likely to be transferred is Nigeria. This would be I
a joint venture involving BlT/BlSR,‘a Nigerian Io
+echnjcal college and the Ministry of Industries -
of the Federal Government of Nigeria. ‘I
Fifth, the study shows how the staff,students
and facilities of an academic institution can bp
utilised to help with the development .of the area-”
in which it is located. .The ultimate, aim of the
BlT staff is to increase the rate;of small-scale
industrialization in the. area surrounding BIT
. and to assist with the establishment of one small
industry for.every’ ten villages and one rural
art.isan >far every village. in the immediate
vicinity. There is still a considerab’le way to go
before thi’s objective)- which a-mounts to crea”t-
‘ing 300 small industries and establishin,g 3,+000 q ’
rural artisans - is fulfilled. A lesson‘ to, be ’
learned fr,om this is that small industry develop-
ment and rural developqent. are noi fields & ’
which rapid results can be expected. 14
 I

<

~-..-.- ~-~

: .
- . i
1

Miscellaneous A,--- -
Ammon.ia printing machine
. I I :<
TV set
ii
Remington typewriter
ANNEX I. LIST OF Photocopier. a . 1
MACHINERY AND Boiler for solvent extraction pl& It
Distillation plant with condenser
EQUIPMENT IN. CENTRAL i
SERVICE FACILITY
‘L- . .8’ _ / 3

Workshop ,
Heavy duty lathe / .;
High precision centre lathe I .-*
Horizontal mill with vertical atta ‘ment
Radial drilling machine
Portable drill
Double end grinder
Hydraulic surface’grinder
Portable grinder ’
Slotting machine , --I- /
!
B nd saw and shaft grinder -
saw and emeryWIt I#’
.B I
T 1 and curter grinder 1

fir --

Universal sheet plate edging, bending and

I..

folding machine
- --_~._7.I --__
Planner machine -’ .-
: Gas welding equipment . . ,-
Portable spot welder i
i .,
Engraving machine j
Portabk gantry of 5 tonne capacity i
1 h.p; air compressor I
s..
Electrical
Oscilloscopes
Audio frequency generator 4
‘, .

Dark room camera . ‘3

, tithotex vacuum frame, bench swirler,‘arc

lamp and etching machine
Universal drafting machine
IC power supply
Mixed modular power supply
Variable transformer models
Vacuum coating unit
4,.
Solid stage micro-spot welder

Carpen try ,/ :_.

Heavy dt+ty wood turning lathe
P
Vertical sand saw s. i
Slotting machine ...k. . . ;
-.- _-_ ~&,+.&ed&~.__.‘-. --.:-._. :w,1::.-..e--.,..___
-.__. _.-.--..-.5-.-:/ i _--I_--. .-----,---<--
-_ __.__ $1i
----~...A,-,~.~-“,~.. -.-_z
Portable blower
; ;. ‘.- - ir (‘r ~ .:’ _
Heavy duty grinding machine ,
r>’
>;? i-
.a - i,I
‘# 2 \,
,.’ I
77 _I .,.,
@d” .
_ ,a.. ; _-----
.$., _.__-/---.. .,, ,_
 i

z.

;
26 Wagon hauler
27 Bomb calo;imetIr 3
X MlsTechri,omek 251. Coal sampler - : --
, ANNEX II .. PRQDUCTS.AND-. 28 Sand thrower “,
*-. ._
.-. .... 30 Blzwer
PROCESSES DEVELOPED L M/s S&‘Engine,er- 32 Reciprocating coal
FOR ENTREPRENEURS L
’ ing.* feeder 300 TPH
_r
.)* ;. 32’;Reciprocatiag coal ;
. ,, 1feeder 400. TPH
En trepreneui -’ Item I 33: .\Picking conveyor . /
A M/s Transcon I Conveyor belt - /i * ,; .’x;smounted) ____.
speed relay \
i
2 Tachometer M,,M/s Bihar Drugs 35 Bormulations’ for h
(measures revolu- Laboratory injectables
tions) c
3 Contactiess i 36 Formulations for :,
oral preparations
proximity’ switch I 37 f&t extract
.4 Tramp metal 0
methods _
detector
G M/s Bhola 3.8 Dis illation unit ’ ;
5 Earth leakage relay \
Industries ‘, -i- 39 Por able carbide -s
6 Automatic 4
gas generator .;!
star - delta starte?
7 Emergency light 0 M/s Transgietz 40 Dry type !.
8 Crawler chain :. Ent. ;, trajsformer :
- .- elements !
1 41\, HV’;Tfansfornier
:*,
‘.-
9 -qrac?~~ti-~~sis~e-~~ pr.oRation unit ’ ,
C M/s Mercurium 10 Testing of high- 4 ----------_____,~Z”HVCii and PT * ‘. ’
tensile fasteners %Q=we* Ql‘1s di __
L 1 I Standardising dies i P M/s Meditron 44 Control elements
D M/s Praveen 12 Gravity die casting cfor machine~tools i
.’
Industries and . . . process for 45-:@lectronic toys :
tr$nsmission clamp 46 ,‘@ledical equipment
r E M/s Precision . 13 Motor’housing ripair .
Foundry Works casting Q Micage ‘- 47 Mica processing
0
F M/s India Instru- 14 Control panels 1 met ds
ment I5 Amplifiers R M/s Balaji Con- 48 Des’.ii?nfof shedsand:
l&Temperature struction Works buil#lin@ ’
monitor S -M/s Nu.trients. 49 Soy!i p$oducts
‘), 17 Control parts India 50 Solvent’ extraction e
G M/s PCB House 18 Complete printing process and plant a
technology T ,M/s Paedic 51 Formulation -
., 1 19 Scree-n printing Laboratiries I liquid paediatric ’
technique ! -
20 Voltage stabilizers *UCM/s Chemit India 52 Formulate@ for T,-
7 ‘,
H M/s Sphinx. 21 Grizley feeder I adhesive
,. 1
22 Cylindrical. pressure V M/s lnbomi 53 Deep drawn dies
I
tank ,: k for TATA,truck
! M/s Alcast 23,,Aluminium component
a pressure die 54 Dies for other
--.. -- castings for defence II ~~~Q~~~~~----.-~~-=--
...._ __-- _,-_..-,- -. _______.__
“._--_ .._...._I” -.- ...-_;,“_”
.-m-y-..-.-7....---- ,.,.-__,__.___
_,__..__-.._~---1-1.- k---- --“-“I---“.
items component , \ 1
J M/s P.I.F. 24 Pneumatic mine-car X M/s Products ! 55 Specia! machinery’ ~:<
axle catcher Engineering . for heavy machine
 'AN NEXIII. ~LIsTOFPR~JECTSUNDE~TAKEN~NBEHALF ',>
\:
*'
.+r
OFLOCALINDtiSTRIES 7 %, \

\
Total source of Period of time ,
It&m Sponsor expenditure finance ‘0 complete I Ii
;i f’ \
Rs ” RS II
* _’
1 Dry type transformer GIL 1 , 60,000 GIL 2 years
60,ooo

2 Thyrister drive for jig boring machine HMTP ’ 13,500 . HtiTP’ 6 months
t13,500

3 Amplidyne esist.ing ampliqer .r HEC 12,980 HEC 3 months

: h . 12,980 c ’
.- ‘( --_.
. __- .
4 Cross-weld detector and ITC 225,~- .._ -rlx *‘-’ 2 years
5 Ultrasonic on-line tube inspection system - 115,000

6 Run away-coal tub protection system and

7 irater levek monitor system and CMPDI 145$00 CMPDI ‘4
8 ‘Mine-car weighing systemaand 172,500 _ - -^ ’ ’
,T=. x
.A 9 Goaf temperature Monitoring system -3 !

IO Lock relay ’ HMBP HUBP ‘. 3 months -

5@0

11 S-Y-Z amplifier HMBP’ 221500 HMBP .3 months

22,500 -
--+----
G
12 Slag cement and L m
P ‘, 6 months
13 Thermal relay and DTD 118,000 DTD
14 .Operating theatre camp . lWb .~..
-- -
I -1-- ’ ,
_-
; rl
CIl = Coal India Limited
HMTP = Heavy Machine Tool Plant
HEC = Heavy Engineering Corporation “
ITC = Indian Tube Company ;’
CMPDbl = Central Mine Planning Design Institute
HMBP = i.
DTD = Directorate of Technical DeveIopmentw :_
”
--

,,
 -
-
,‘.
,_.’ 4,
.i :.

5 tonne -7-T

-.1x w
- -
ANNEX IV. LIST Ol? ’ Hacksaw machine
,;\\I j’
c, ..‘\, :
MACHINERY AND Eye rolling machine
Double ended adjustable grin
EQUIPMENT IN THE SMALL Taper rolling machine
.3INDUSTRIES STUDIED. Wood turning lathe
Hardening furnace ” 4 ,

Perfect Innoculators and Fabricators. ,.

Lathe,8’ bed, heavy duty
Lathe,,6’ bed, tool room precision * Meditron
“j Drill (radial type) 1” capacity 2 Winding machines
’ Power Hacks,?-w - 16” Electronic and electrical testing equipment such
I Shaping machine, 24” stroke as oscilloscopes fi:z’ s
.,.,--
” Are welding set, 300 amps Various hand tools
Arc welding set, 200 amps
Hand grinder Transgietz
Flexible shaft grinder .T. Winding machine for t ansformer
Angle grinder .T. Winding machine for t 4ansformer,
2 Hand drills ’
t” acuum impregnation plant’
a Verticaledrilling-cam-milling. arrived
machine-capacity 25 mm
Lathe, 8’ bed, heavy duty J 1980
1
December
Baking oven
Oil filtration plant * c
Radial d’rilling machine 1
. .
Treadle shear machine
PieciGon Foundry
Oxyacetylene welding set
Oil-fired furnace Spray painting, machine and compressor
,Coal-fired furnace (self-made) ..
Brazing set
Lathe Control panel for testing transform$r ’ .’
Hacksaw machine B
Trolley ,
2 Drilling machines
Gantry
Bench grinder ii
,,’I Measuring instruments
Hand grinder
Arc welding set
Welding set Pipe bending machin?;: 9
Gas cutting set
Sheet bending machine
Severaf dies
Miscellaneous hand tools ,
I .:
f h4ercAun
\- 3 Bihar Drugs
Cold header ’
J, Trimmer Pyrogen free distilling still
ii ‘Thread rolling machine : Autoclave es
9 Drying ch,amber .
Centre lathe
Draw bench Bottle bs&.hing unit
Power press , _
Nut cutting machine .
Nut threading machine
Pointing machine
.a. Grtnder .d P 1 ’ Filtration unit
* - -1 I’;l / U.V. lamp ’
. ),’ “&?
Perfect Forgings , Chemical balance
Forging press (screw press) s’ 300 tonne - Physical balance
Powerpress 100 tonne Bottle capping machine ’
. Power press , 50 tonne Vial capping machihe
/
8d ‘1’
! ,
 *
Ranchi l(olling Mill
‘I- ’ Gas cutting equipment
6’1 Mill with rollers and 5 tonne flywheel’ 12 ’ lathe and accessories
110 kW, 3-phase motor with liquid starter 10” grinder
250 RVA step-down transfamer , ,- %,I_ .,
Oil fired furnace (capable oftheating 8 tonnes of Inbomi . r ”
steel) . . i Temperature controlled press ,
,‘- /A _
Shearing machine (capabtg of shearing up 1%” Heat trea,tment furnace _X’
, I __r
^--
of steel) _. Sprayers &cl hand tools ,_.., -- _/ “.
Tanks, pumps etc. for recirculating cooling ~~Power saw”- _---* _-
water ! Shearing m&hine-,- as - ’
,, -.,A-- .-
Arc welding equipment

J:

:
._-_ a -.

i
1

‘P

,
_

! t

,
4
 I-
__-/’

The Government subsidises this margin money

for smill scale enterprises by issuingrup to Rs
20,01)O~oiup toJQV0 of the tomLc.apitaIas a soft- -.
loan. This ‘seed’ money repayable over IO years
ANNEX + BANKING- at an interest rate of 3%. If the small scale enter-
PROCEDURES prise folds up, then the Government takes ;a
fairly lenient view abo,ut repayment/. ,
.The Government can consider giving more
All, the units sponsored by SIRTDO are financed ‘seed’ money as a special case to technical entre-
through the United Commercial Bank. Loans are preneurs. None of the SIRTDO sponsored
given for fixed capital and for working capital. entrepreneurs have received this extra money
as yet, but SIRTDO is still working towards
_ Fised capital unravelling the administrative complications
The Bank gives a term loan for fixed’assets such involved.
as machinery and equipment-.-The loan is to be
repaid within five years and the interest rate is W orkiqg capital
14070. Technical graduates from a recognised Cash &edit limit c
institution are .eIigible to receive up to 7% This is the limit up to which the entrepreneur is )
interest subsidy on the term loan. This is paid by allowed to borrow.. A certain amount (worked
the Government of India, through the State out between) the Bank and. the entrepreneur)
Government, directly to the Bank. None of the is sanctioned against raw materials, factory
SIRTDO entrepreneurs are currently receiving expenses and stock of finished pro,ducts.
this subsidy. Eve,ry month, within the first week, the entre-.
: Normally, the entrepreneur collects quota-
: ;- preneurhas to submit a stock statement which
tions for machinery from different suppliers and itemises the materials and total value of goods in
then decides from whom he should purchase his stock,. The entrepreneur’s drawing power (DP)
machinery. After approval from SlRTDO; an within the month will be calculated on&e basis
order is placed and against a pro-forma invoice of the value of goods in the Factoryand the pre-
the Bank sends a manager’s cheque.directly to arranged margin. For example, if the value of
the company concerned. Some companies will goods in the factory is RsTO,OOOand’the margin
not agree to supply machinery against a man- is fixed at 20% then the drawing power will be’:’
ager’s cheque (because of administrative delays)
so SIRTDO has persuaded the Bank to allow the Rs 70,000 - 20 x 70,&O = Rs 56,000.
entrepreneur to make payment for machi-net-y by loo! >
draft if this should prove necessary. Addition- In other words, w,ithin the month the entre-
ally, if it proves necessary to pay cash for equip- preneur will be entitled to issue chequ& up to;a ‘:
ment, SI RTDO has persuaded the Bank to allow value of Rs 56,000. 4
the entrepreneur to draw out cash on an over-
If there are any particularly heavy transac-
draft account for this purpose. .
tions in the middle of the
The Bank is a member of the Credit Guaran-
preneur can’issue a new stock state
tee Corporation which entitles it to take,advan-
tage of the credit guarantee scheme run specifi- drawing power will go up.
cally for small scale industries by the Industrial \
Overdrajl limit
Development Bank of India. This means that
term loans in the priority sector (small industries lf the entrepreneur’s drawing power is Rs 56,000 ,,. -
and agriculture) get an automatic grace period but he has to draw beyond tha# to the extent of ‘” ‘.<
on repayment of up to two years. Outside of this Rs 20,000, then he can use his overdraft limit (if
scheme, acquiring a grace period on repayment this has been sanctioned). Items which can .be- :
ofpa term loan is somewhat complicated. : paid for out of this account includI,initial invest-
_-. ’ ments, pre-operative expense,.idvances paid for
. .&p “*
Margin money/seed money d%ZI%@‘ing raw materials, and various miscellfaneoui
_..~...I ._.... ;
, Normally, the Bank supplies 75% of the capital expenses such. as an electricity surchargear ~-
needed to start a small enterprise and the pro- enforced,safety equipment which was not fore- ; ‘)
specti=?e entrepreueur must find the remaining - seen at the time of taking out the initial loan. *,
25%,, This 259’0 IS known as margin money. When the overdraft limit is used for purchase
 ,’
,.A” .,!’
__”
\, I
. . ’ _, ‘- --- _.___ -~-----

of raw materials, this is adjusted and debited In,deeb, Government’ purchase cannot be done, 0
from the cash credit limit when the stock state- this w+ay!:-it operates on the basis of payment. I ’ ,
ment is issued. after 60 days. - i“j, _- -7 - .I,- 4’
0 Sometimes, the BP limit can be used for pur- ‘i-1
Bill purchase limit chasing a-bill for which pa, ’mentrwill be received
When an entrepreneur has supplied a consign- : within the agreed 60 da x , even though, the ..
ment of goods to a company, he may be able to transaction described
draw a bill against that company’s name for the
value of the contract. This bill can be purchased
by the Bank and the amounc.credited to the that+ cheque for Bayment of the goods will be‘- k..
entrepreneurls cash credit limit. ., drawn against ths.*Bank’s $ame so;&batnb-one ‘\+ :
9 . For example, an entrepreneur’ may have .art else can cash tihe Qgxpi~.
* ~\
order’ worth Rs 20,000 ready for shipping. \ , -
Instead of%waitingfor the goods to reach their
destination and for the recipient to pr6cess pay-
-. _mqnt to him, the entrepreneur can take the trans-
port receipt from the9haulage contractor and
take. this to the’ Bank which will credit his *
account with Rs 20,000 and send the transport customers have ‘beenen-pending for ‘a long-‘time.
receipt to the purchasing company’s Bank. This T,here is a very high radelo&interest on packing ,.
Bank will then forward the receipt to its client credit and Banks are reluctant to” issue it at all.. ._ !’ ,‘-.:‘.
after debiting his account. Of course, not all I-because they, feel the entr&repeur ma-y--become-. ‘. ,,,,
cornpa& agree to this, sort of transaction: !azy in regard to chasing bills. L r
L6
 ANNEX VI: OPEN MARKET
PRICES -OF RAW
MATERI’ALS 1973 - 1980
(Rs per tonne) ’ - 0

‘iv
,
I
e- I
Alloy* Scrap Mild ’ ,.,I,
Alurrhiurn
Steel - 23~ Steel
_,’ .
1973 2,500 2:0& 600 1,500’
4,000 3,000 ‘. 900 1,600 0 5. ’
1974
5,500 4,500 1,090 l,fWO .I
1975
1976 7:OoO 5,ooo 1,150 2,!loO .+- I .-,
8,500 6,5@ .’ 1,350 2,200 - ; I ‘.
1977 +
1 1978 9,000 7,000 1,500 3,500 . * 4
11,ooo 12,ood 2,000 4,200 ’ . (; ” il
1979
1980 13,000 15,000 2,500 .~5;200 _ ‘\
’1
_’ ? .
,, ,/’_,
3,’

_A
/ .

:\i
 I i’

many items as he could produce and finance was- iv

,,”
_/,”
..-
, . >
’ ..
readily made available. It was imgos’sibl ”
I’
ever to find’ a prrvate company which
undertake his ‘small’ order for production of the.
ANNEX GII: PROFILES ‘OF\'\, \ dies he needed. Although ,BlSR had originally
SELECTED. suggested” that he should use a commercial die i

ENTREPRENEURS maker becaux~this~ight ~rGv<&&ker, the dies P.

ultimately had to be made in’ the BISR work- . ..

FPONS~REDBYTH~BISR m shop., Without this assistance, Mr Mehta. wquld

CENTREATJAIPUR . have been unable to start producfion.
I

/ j
I
. :
Lumen Engineers
Mr Mathur of Lumen Engineers produces auto-
mobile reflectors. He started this line ofgroduc-
d tion in the BISR building using a vacuum coating
unit which was designed and fabricated with the
help of BISR staff. Having ensured,that the pro-
cess was e~ono.mic&r&ien~~ed BISR facilities
e h&&n improved vacuum coating unit.
?h& m 0.70 lakhs whereas an imported
machine would have cost Rs 4 or 5 lakhs and
would have resulted in his product being hope-
lessly uncompetitive. Mr Mathur attributes his
‘success to this factor plus the fact that he had
time to learn how to handle a busi
up his self-confidence while under BISR’s wing.
, ?-
5
Rad&&
Finally, in the space of five years Mr~CXi@B-and
Mr Agarwal built up Radetron under PlSR
sponsorship from a makeshift unit producing,a
few voltage stabilizers to a flourishing business
employing 20 people and with an nu’al turn-
+
over in excess of Rs 12 lakhs. The>e $repreneurs “,
attribute much qf their success tot 1 e t.yo and a :
half years they were being ‘nursed’;jn&he BlSR:-
building during which time they.coh
many problems and also build up t
dence to make de&ions and take risks. They
also feel: that theusejof BlSR’s name has helped
in acquiring<marketir

S wastik Electronics
Mr Ramesh of Swastik Electronics produces
television hardware. The most essential ,part of
this production process is having good quality
dies. The dies, costing about Rs 2 or 3, lakhs, i
5.‘4.
were;made in the BISR workshop for the entre-
preneur. He could not have afforded to set up in
this line of business if it hac)been necessary to
pay to have the dies made, T!ie &es remaih ihe
property of BlSR and are rentedby the entrepre- I. .

neur. &Jr bmesh has now been waiting several

months forlsupljlies of cement to finish making
the floor.& his shed. Until this is done, he can-
not use his own press and so BISR ii assisting by
n
allowing hisworkers to carry out production on
the press in the central workshop. Witbout this
assistance, there would be no turnover and Mr
Ramesh would be unable to cover costs relating
to rent, interest, etc.

A ; to-Electricok
Dies-have
*___-
~.~...~_ also .been a problem for Mr Mehta
.._ __,ust-started;~s~~~-~~~~~~.-~l~~~aJs
_.. - -_-.=7~~~~~.q.&G
who had
. - w!hich will, produce- electromechanical and
electron2 direction-indicating flashers for cars.
In his case, there was a market waiting, for as
 .A ..
a
c .
\
‘1.~ 3

21. Scale
22. Rail >\,
__ ”
23. Flat bastard file, 12” *
24. Flat 2nd cut file, 6” -
ANNEX VIII: TOOL KITS’ 25. Triangular..2ndeuf~file~O”
GIVEN TO RURAL ARTISANS 26;.Rouid l&tad file, 8” lc
4~ 27. Knife, 2nd cut, 6”
AFTER -TRAINING
28. ‘Half round, 2nd cut, 10”
3 29. File handle, large
30. Try square, 6” master ! ’
Pump mechanic tool kit ” 31. Outside callipers, 6”, B
1, Hammer, 1 lb ” 32. Inside c&ipers, 6”, B * ;, --“-
2. Screwdriver, 8” :I, 33. Diyiders, 6”, B
3. Cutting plier, 6” J ‘k
34. Jenny callipers . ’
4. Double-ended Spanner, 6, to 19 (6 pe) 35. Steel scale, 12”
5. Ring spanner, 24 x ,26 l p
36. Tin cutter, lo!’ ./i
6. Tabular spanner, J/8 x 3/‘16 37. Hand drill, l/4”
7. Tabular span.ner, l/4 x 5116 38. File handle, small
8. Tabular spanner, 3/8 x 7/ 16 39. Flat chisel, l/2”
9. Tabular spanner, l/2 x 9/16
10. Adjustable wrench, .12” ’
Additional tools
Il. Clamp vice 1. Flat chisel 1”
12. Oil can 2. Pin punch
13. Pipe wrench
3. Hacksaws
14. Hacksaw frame 4. l/8” Drill bits; 2-Nos
r 15. Flat bastard file, 10” 5. 3/ 16” Drill bits, 2 Nos
16. Round 2nd cut, 10” 6. l/4” Drill bits .’ 1 No’
17. File handle
18. Flat chisel
19. Pin
20. Valve grinder
21. Grinding past..
Socket handle to be made
i =
Cycle-cum-fitter tool kit
1. Hammer, 1 lb E,,

2. Screwdriver, 8” e
I -.,:,
.’

3. Cutting plier, 6” I b’ ,.

4. Adj. wrench, 12” .’ s-Y.

5. Vice, 3” :.
\ i.
6. Oil can
7. Hacksaw frame
8. File, half round, lo’! 2nd cut .
9. Handle
10. Wheel truing machine
11. Spanner wrench, 2 pc v
12. Cycle foot pump n
13. Big wrench for ball-bearing cup
j 14. Dumb-bell w:ench
15. Spoke nipple key . .,
a
16. Flat combination spanner ’
.-18.17. Pin
Flat chisel, l/2” ,
punch
19. Scissors !A ,
20. Ri,m strayghteneq ,

86
0
 ?

% __ ..
? .
1
~ .__-
>..
.-

. *

:
De Vries, Barend A., Industrialization and 3
- Employment: The Role of Small and Medium
.
’ Sized Manufacturing Firms (World Bank. .’ :
Reprint Series, No. 116, 1979). ‘8
BIEjLIOC.iRA$‘HY , 1.
i’ ,i .‘ General Repor! on SIRTDO, Ranchi (Mesra, d
&\ c- ” 1 ’ Deeember 1979).
Aggarwal A-K., Repoh, on Activities of the Hogg, M., ‘The promotion of small enterprises ;
Low-Cost Material Development and Research
in rural India’, ODIReview, No: 2, 1976. (Over- ,
Cell (BlT, Mesra, 1980). 1 seas Development Institute, U.K.). ”
Basu A.K., and Dey I., Internal report on Rural~ .. Jain-_~L.C.,
-- ; -tlntegrated
~-~ Industrialiiation of Non- ’ .
artisgnrraining programmes’an’d rural develop- .
Metropohtan Areas: Isires and Implications’,
ment projects related to *S<~RTDO (Mesra, Economic and Political .deekly, June 1976. +. .
=I ‘” [ ‘~,
undated). I Jenkins G., Non-Agricultubal Choice of Techni- * ’
i Basu A.K.,’ ‘SIRTDO: The Experiences of a ques, (?&r’d University Press, @ford, 1935). a , ii,
Technology Institute in Appropr%r$e Techno- Panditrao Y.R., -f&encing of 'Cottage and ’ , .+
Logy’, Appropriate Technology, Vol.16 No. 2, Village’Industries, Pamphlet
Commerce,- 156
August 1979, -(Intermediate Technology..Publi- (Commerce .Pubs. Ltd., Bombay,>98&).
cation,London). , \i
P<asad K,, The Strategy of-Industrial Dispersal
Behari .B., Rural Industrialisation~ in .India
G,‘(Delhi, Vikas Pubfishing House PVT L’rdi,
1976). ’ *
i
Bhagivtiti J . N. and Qesai P:, India: Plannin
Industriali,-ation and Trade Policies since
(O.UP, Delhi, 1970). ’
Bhattacharya S.N., Rural Industrialisati Reserve, Bank of *-India, Agr
India: Its Nature and Pro6lems (Delhi - Department, Report of the Stu
’ 110052; BR Publishing
._ Corporation, 1’98Q). % c,ul@+ral Credit Institutions in
Broun J., Programme for .lnvestment in the‘ lgnj. * 4 I _ \
Small Capital Enterprise Sector, Part II: ‘Case
Rural Indust?ies Planning
Studies: India (Cambridge, Mass. Action Inter- Industries Projects ,“Program’me: Review
national/AITEC, 1980). I
Progress up to March 19
Carr ’ b/I., Economicall-v Appropriate Techno- 1970). 1
.’ :
’ logies: An Annotated Bibliography, (Interm‘edi-
ate Technology Publications, London 1976). Sigurdson’B”
Central Silk Board, Social Forestry:
concept of tasar development for triba
:, ry Epteqion Trai.ning Institute., , ,!
Central @ilk Board).
Research, .Quality Control, Eitension and
‘O’* 14’ No’ 3626Y December .20Y Training.-SelectedReadings(Hyderabad, SIET, : ,
issue ‘Small Industry: &datedY. m
:: -
Special Supplement, on iBIT, The Sunday I + : :.,.
Dagli V., Khadi and Village Industries in the
Statesman, Novi 23rd, 1980. ;. *: :. ~
Indian Economy (Commerce Publications Di%: /
1976; Bombay)~: *- Upadhyay M.N., Economics o~%&dicra@ -
Industry (S. Cl@.nd-& Co., Delhi, 1973). : L” , ‘.’
Development Com@nissioner,Small-Scale’indus;’ ,~
tries, Ministry of Industry. Variety of bookl+’ Vakil C.N. c/d), Industrial’ Development of; =‘.
f on assistance to small scale industries (Ne$ India: Policy pnd Problems ‘(O$ien;’ Longman; ..
’ Delhi DC (SSI), Ministry,of Industry)., Delhi, l973).[ ‘:. . I4
!-
de Sa F..; Crist$.in Chota Nagpur, (Redwp- Vidhyanthi L.P:, Indus.trializa&n -in India .‘+. ,,/’
tori& PublicatGn, Bangalore, 1975). _ (Ranchi University, $68). ‘, ” . I “:
*...-.
,.;\-? ..
,
*
‘ii,
i I ’ -